San Diego County’s median home price dropped for the second month in a row in July as rising interest rates spooked many buyers.

The median home price was $800,000, said CoreLogic/DQNews on Wednesday. That was down from a peak of $850,000 in May.

The median price is still up 9.5 percent in a year.

Prices were down across Southern California, and much of the nation, as interest rates climbed from historic lows. Lack of enthusiasm from buyers has also meant fewer sales. San Diego County had 2,667 home sales in July, down 18 percent from the previous month.

The interest rate for a 30-year, fixed-rate mortgage was 5.41 percent in July, said Freddie Mac, up from 2.87 percent the year before. However, July’s average rate was down from 5.52 percent in June.

Buyers are concerned about interest rates and, more broadly, an anticipated downturn in the economy.

Homes are staying on the market slightly longer, meaning there are more options for potential buyers. There were 5,368 homes on the San Diego County market from July 4 to July 31. That compares to 4,758 around the same time last year; 5,922 in 2020; and 8,659 in 2019.

Alan Gin, economist at the University of San Diego, said it’s possible home prices will stabilize if interest rates stop rising, but that is very hard to predict.

Economists and housing analysts are not all in agreement that prices will continue to fall. Zillow economists predict nationwide home prices will increase 7.8 percent from July to June 2023. The reason, they say, is there is still a nationwide housing shortage and competition for homes will keep pressure on prices.

Zillow predicted San Diego County home prices would increase 7.1 percent during that time, slightly below the national average.

All home types in San Diego County in July were down from record highs. The median for a resale single-family house was $910,000, down from a peak of $950,000 reached in April. The resale condo median was $627,500, down from a peak of $663,000 in May.

The newly built median was $741,000, a figure that combines condos, townhouses and single-family homes. A peak of $812,500 was set in October 2018 when there was an influx of luxury single-family homes for sale.

Southern California experienced an overall 1.3 percent median price drop from June to July. The biggest drop was San Diego County with its 2.9 percent reduction.

It was followed by Riverside County, down 2.5 percent for a median of $579,500; Orange County, down 2.4 percent for a median of $1 million; Los Angeles County, down 2.3 percent for a median of $840,000; San Bernardino County, down 1 percent for a median of $515,000; and Ventura County, down 0.6 percent for a median of $805,000.

Source: SDuniontribune by Phillip Molnar