Home sales in the Bay Area hit their lowest levels since 2008 last year, as an era of pandemic buying sprees came to a definitive halt in the face of high mortgage rates and low supply.

Sales of existing Bay Area homes declined by 24% in 2023 from the year before to 44,813, according to new data from the California Association of Realtors — reaching levels of home-buying last seen during the Great Recession. The slowdown wasn’t caused by a frozen economy and lack of demand, as it was then, but a lack of supply.

“Regardless of the fact that home sales were down, it wasn’t because buyers weren’t in the marketplace — it was because sellers hesitated to put their homes on the market,” said Jordan Mott, a broker based in San Jose.

The 30-year mortgage rate peaked at 7.79% in October, more than double the rate during the pandemic years. Rather than trade up for a new home at a higher rate, many have chosen to stay put, pushing inventory to record low levels.

“Many people that already owned a house during COVID refinanced,” Mott said. “Even if they wanted to move, it doesn’t make financial sense.”

Despite the low inventory and the higher rates, plenty of homebuyers in the region — which boasts some of the nation’s highest income levels — remained undeterred. As multiple buyers competed over fewer homes, prices remained elevated. The median price of a single-family home in the nine-county Bay Area ended the year at $1.18 million in December, up 12.6% from the same time last year.

The median price of homes sold went up in most Bay Area counties between December 2022 and December 2023, except for San Francisco, which recorded a 7.3% drop to $1.45 million, and Solano County, where prices dropped 3.1% to $562,000.

While prices were up over the year, they dipped somewhat between November and December, due in part to the seasonal cooling of the market around the holidays. Here’s how the median home price shifted across the core five-county Bay Area:

— Alameda: $1.18 million, down 4.5%

— Contra Costa: $800,000, down 7.0%

— San Francisco: $1.45 million, down 5.5%

— San Mateo: $1.8 million, down 0.3%

— Santa Clara: $1.73 million, up 0.4%

With the average Bay Area home sitting on the market just 23 days as of December, motivated buyers this year were under pressure to submit offers quickly to beat the competition.

“The market moved quickly, and if you didn’t jump on something, it would be gone before you knew it,” said Kevin Spicer, 49, who bought a two-bedroom, two-bath home in Suisun City, near Fairfield, in July.

Not only did homes move fast — so did interest rates. Spicer, a software engineer, recalls receiving a call from his mortgage broker one morning this summer just as he was about to unwrap a granola bar for breakfast. Wanting to eat first, he nearly rejected the call — but then thought again.

“Mortgage rates are rising right now in the next few minutes, ” Spicer recalls his mortgage broker telling him when he picked up. “Do you want to lock in what you have right now?”

Spicer said yes, and ended up with a 6.27% interest rate. Had he decided to call his broker back later, he would have ended up with a slightly higher rate, paying an additional $400 a year.

“When your loan officer is calling you, jump across the room to answer,” Spicer said. “If I had waited, that could have been the most expensive granola bar I’d ever eaten.”

During the winter, sales dragged even more, as most people tend to avoid listing their homes during the holidays. At the end of December, there was a 1.5-month supply of homes on the market. Five to seven months is considered a balanced market.

Still, even during the slow season, certain homes can fetch multiple offers, as Tim Yee, a real estate agent with RE/MAX in San Jose, found when he listed his family’s 1958 mid-century modern home on a large lot in Willow Glen in December.

“It was kind of scary because of the market, but we decided to go for it,” Yee said. “It went viral on Zillow — it was a pretty unique property.”

The asking price — $2.9 million — didn’t seem to worry potential buyers. Within two weeks, Yee received three offers, and accepted one that came in above asking.

“There’s still enough people with money in the Bay Area that the pricing isn’t driving them away,” Yee said.

Home sales are expected to pick up in 2024, especially if interest rates come down further, encouraging more sellers to list their homes.

“Most likely in 2024, if rates come down a little bit, we could see some relief in supply,” said Oscar Wei, economist for the California Association of Realtors. An association forecast, released in September, predicts that existing single-family home sales will increase by 22.9% this year, bringing 2024 more in line with 2022.

But don’t expect new homes to flood the market right away. Analysts anticipate that declining interest rates will motivate more buyers to come back to the market than sellers.

There are signs that home-shopping activity has already picked up. Mortgage rates have dropped from an October high by a percentage point to 6.6%. As of the week ending Jan. 12, mortgage purchase applications were up from a week earlier.

The increased demand could lead home prices to appreciate further this year.

“As interest rates go down, obviously people can afford more house and make higher offers,” Mott said. “That, combined with limited inventory, is going to push values upward.”