San Antonio’s frantic homebuying market appears to be over. For the fifth month in a row, the number of home sales in the San Antonio area has dropped year-over-year, according to August figures released this week from the San Antonio Board of Realtors (SABOR).

But would-be homebuyers who were waiting out the overheated market may have to wait a while longer. While price increases have moderated, and there have been slight decreases in recent months, home prices remain at highly elevated rates compared to last year.

In August, the median home price was around $339,200. That’s 11.5% higher than in August 2021, but slightly lower than July.

Adding to the challenge for buyers is rising interest rates.

“The big story of the last two and a half years had been interest rates,” said Adam Perdue, a research economist with the Texas A&M Real Estate Research Center.

The historically low interest rates during the pandemic gave an enormous boost to the purchasing power of homebuyers, driving last year’s frenzied market. But since April, the Federal Reserve has issued a series of rate increases in an effort to combat inflation, affecting mortgage rates. Today the average interest rate for a typical 30-year fixed-rate mortgage is 6.07%, according to Zillow. For a 15-year fixed-rate loan, it is 5.21%.

“Interest rates remain the big story,” Perdue said. “Except now it’s in the opposite direction. We’re returning to a less stimulated market.”

Home sales are sagging. A little more than 3,500 homes were sold in August, down nearly 10% from August 2021. But San Antonio’s drop in the number of home sales is less than the state’s (a 11.8% decrease).

Perdue said he expects sales to continue to fall and for price growth to remain flat for the next two to three years, “until all of this excess slack works itself out and the underlying growth dynamics of Texas and San Antonio can finally catch up.”

But that comes with a big caveat. “If we end up going into a recession, all the bets are off,” he said.

The bidding wars may also be over. Nearly 99% of homes sold for their list price in August, according to SABOR, which is more than the state average.

Homes also were staying on the market for an average of 30 days, six days longer than they did in August 2021.

Supply continues to be tight compared to its pre-pandemic level. San Antonio had about 2.9 months of inventory in August, compared to about 1.8 months a year ago. In the years leading up to 2020, San Antonio typically had an inventory level of about three to four months.

Waylon Cunningham covered business and technology for the San Antonio Report.