Last month, we reported that the number of single-family homes being put up for sale in San Mateo and Santa Clara counties was returning to ‘normal’ levels after shrinking by about 25% due to the interest rate hikes in mid-2022. We also noted that we are now experiencing a problem with buyer demand, but there was not enough data to determine whether April 2025 represented a new trend or if it was just an outlier month. Anecdotally, there was plenty of evidence that buyers were hitting the pause button on home purchases after the April 2025 tariff wars, which caused a stock market decline of about 10% that same month. While the stock market has recovered much of its losses, many buyers are still sitting on the sidelines until there is more certainty about how things will ultimately play out.
Real Estate Market: Demand Still Below Normal But Prices Stable
Meantime, over the past couple of weeks, Redfin, Zillow, and some news agencies have reported that there are currently up to 500,000 more home sellers than buyers in the U.S. This slowing demand is a nationwide phenomenon, not just a local one. Redfin notes that the number of sellers nationwide now exceeds buyers by 33.7%. In 2024, sellers only outnumbered buyers by 6.5%. Meanwhile, Realtor.com reports that most Americans (63%) would only consider buying a home if mortgage rates fell below 5%. Currently, a 30-year fixed mortgage rate is nearly 7.0%.
Despite the lower demand for housing, single-family home prices per square foot in San Mateo and Santa Clara Counties were relatively flat in May 2025 compared to either April 2025 or May 2024. Prices are now at $1,241 per square foot, just 3.7% below the all-time high of $1,289 per square foot in March 2025, before the tariff announcements.
The best guess for local home prices remaining near their all-time highs is that buyers continue to select the best properties, resulting in only those choice homes appearing in sales statistics, while many properties simply aren’t selling.
As of June 2025, there are 2,127 single-family homes for sale in San Mateo and Santa Clara Counties, which is on the high side. We’d typically expect around 1,300 to 1,600 homes in a seller’s market. We would also expect the number of closed sales to represent at least 80% of the prior month’s new listings in a seller’s market; however, in May 2025, that figure was only 61%. Traditionally, new listings in June are about 10% fewer than in May, meaning another 1,750 homes could enter the market in June 2025. This will result in growing inventories unless there is news of a more positive economic outlook for the U.S. or mortgage interest rates drop closer to 5%.
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