In the first nine months of 2016, the Bay Area saw a 10.3 percent year-over-year decline in home sales across the region, including double-digit decreases in Alameda County, Santa Clara County and San Francisco.

A new report confirms what many have been saying for several months now: The residential real estate market is losing steam around the Bay Area.

Sales are sluggish and the rate of price appreciation should continue to decelerate in 2017, according to the PropertyRadar information service.

“Prices can continue to skate higher for a while, but at some point you run out of people willing to pay, and prices correct,” said Madeline Schnapp, the Truckee-based firm’s director of economic research.

Looking at the first nine months of 2016, the report shows a 10.3 percent year-over-year decline in sales across the region. Broken down by county, the number of single-family homes and condominiums sold fell by 11.3 percent in Alameda County, 10.1 percent in Santa Clara County, 9.1 percent in San Mateo County and 8.2 percent in Contra Costa County. And in San Francisco, sales tumbled 13 percent.

Even in the inland counties — heretofore a safety valve for buyers seeking affordability — sales were lackluster. Sales activity fell by 9.4 percent in Napa County and 2.4 percent in Sonoma County, while Solano County sales sneaked up by just 1 percent.

Ironically, it is a sign of economic health — the diminishing number of foreclosures and distressed properties — that is contributing to the market’s slowing. According to the report, distressed property sales — down 35.7 percent on a year-over-year basis for the first nine months of 2016 — have declined so dramatically that they now are a drag on overall sales through the region.

When the Bay Area was in the throes of recession early in 2009, distressed property sales — “short sales” of underwater properties and sales of foreclosed properties — accounted for an astonishing 69.1 percent of all sales in the region. In the first nine months of 2016, distressed sales accounted for only 8 percent of total sales.

Because most distressed properties sell for $500,000 or less, their diminishing numbers contribute to the shrinking supply of affordable homes. During the first nine months of 2016, sales of homes priced at $500,000 or less fell 26.7 percent on a year-over-year basis throughout the region, while sales of distressed properties in that same price category fell 45.7 percent.

Here’s the upshot. An increasing number of buyers who can’t qualify for, say, a $780,000 house — which in September was the median price of a single-family house in the Bay Area — are left without many options. County by county, these were the September median prices, as charted by PropertyRadar: $505,000 in Contra Costa; $730,000 in Alameda; $950,750 in Santa Clara; $1.137 million in Marin; and $1.18 million in both San Francisco and San Mateo.

“Our prediction,” Schnapp said, “is that we will continue to see sluggish sales and prices that grind higher but at a much slower pace until either prices adjust or new inventory comes on the market.”

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