San Diego County’s median home price started the year at $585,000, up slightly from the previous month and pushing toward record territory.

Home prices in January were up 7.9 percent annually, said CoreLogic data provided by DQNews. The median was down from the peak reached in November of $594,909.

The same factors that have pushed up national and local home prices the past few months — shrinking number of homes for sale, low interest rates and job demand — are expected to continue to put upward pressure on prices.

Mark Goldman, a real estate analyst with C2 Financial Corp., said one of the biggest factors driving sales are lower interest rates.

“If somebody was contemplating waiting for rates to come down (to buy), today’s the day,” he said. “These are some of the lowest interest rates in three years.”

The mortgage interest rate for a 30-year, fixed-rate loan was 3.62 percent in January, said Freddie Mac, down from 4.46 percent at the same time last year.

Rates have continued to drop, which could have a big impact on sales. The 30-year rate hit around 3.34 percent Monday, said Mortgage News Daily.

One of the reasons for dropping rates that Goldman cited: coronavirus fears are causing U.S. bond yields to drop. Mortgage rates follow the yields on mortgage-backed securities. These bonds typically track the yield on the U.S. 10-year Treasury.

Even with favorable borrowing terms, many potential buyers are facing fewer options compared to past years.

There were 4,186 homes for sale in January, said the Greater San Diego Association of Realtors, down from 5,884 at the same time last year. Inventory is low nationwide with various reasons cited, including builders still playing catch-up after construction largely stopped during the Great Recession.

Nationwide, the total housing inventory in January — 1.42 million units — was down 10.7 percent from the same time last year, said the National Association of Realtors.

San Diego County home sales were low in January but the month is typically one of the slower sale periods. There were 2,600 sales in January, up from 2,116 in January 2019.