The real estate industry California Association of Realtors trade group is out with its latest report on “distressed” property sales, analyzing foreclosures and short sales (in which a bank accepts a payoff amount less than what is owed), finding that both continue to drop as a percentage of the overall housing market, largely due to rising prices.

The total of all distressed property sales accounted for 21.8 percent of all sales statewide last month, down from 24.4 in April and more than halved from the 44.2 percent of the market in May 2012. REO sales, in which a bank re-sells a foreclosed property, fell from 22.8 percent of the overall market a year ago to 7.3 percent last month, only the second time (the first being April 2013) that bank-owned properties accounted for less than one in ten overall sales since 2007.

In San Diego, where home prices have continued to outpace national indicators, the share of distressed sales is even lower at seven percent of the overall market, down from ten percent a month ago and less than a third of the 23 percent reported a year ago.

Industry insiders have pointed to delays in the foreclosure process as both a reason for the decrease in distressed sales (three-quarters of the drop can be attributed to fewer foreclosures) and the rise in housing prices.

With interest rates on the rise, however, it’s debatable whether prices can continue to rise as more expensive loans price potential buyers out of the market. Average mortgage rates have risen over a matter of weeks from the high 3 percent range into the mid-4s for a 30 year fixed-rate mortgage, meaning a house purchased at the same price a month ago could cost buyers thousands more per year in mortgage payments.