After Years of Record Home Sales, the Bay Area Is Finally Cooling

All 10 of the fastest cooling housing markets are located in the American West, and five are in California, Redfin reports. Traditionally pricey California metros like San Jose, Oakland, San Francisco, Sacramento, and Stockton are all cooling as higher mortgage rates price out a growing share of homebuyers.

The already costly Bay Area recently became even more expensive for buyers burdened by fast-rising inflation, and as affordability is pushed to the backburner, house hunters are reconsidering their purchasing plans. That subsequent drop in demand is causing homes to sell much slower, and in some cases, at reduced prices.

San Jose is cooling at the fastest clip, with measures of homebuyer demand and competition dropping off quicker than any other major metro this year. The supply of homes for sale in San Jose was up 10% year over year in May–but just three months earlier in February, supply was down 43%, indicating that buyers are now gobbling up fewer homes. And the share of homes that went off the market in two weeks was down 5% year over year in May, a big swing from the 22% year-over-year increase in February–that’s an indicator that homes are selling slower.

After San Jose, Sacramento is cooling fastest, followed by Oakland. Stockton, CA, located about 50 miles south of Sacramento, comes in at number five, and San Francisco is number 10.

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