The number of homes sold in the San Francisco-Bay Area jumped 6.6% from 6,334 in September of 2010 to 6,749 last month. Despite the annual increase, prices experienced their usual August-to-September seasonal drop with prices falling 10.2% month-to-month. "As interesting as today’s market is, what’s more interesting is what’s not happening," said John Walsh, president of DataQuick."While there has been a lot of talk about shadow supply, especially distressed properties that haven’t been put on the market, demand continues to accumulate. Empty-nesters want something smaller, growing families want something bigger. People still die, they get married, retire – all of this generates demand. And only a fraction of that demand is being met in today’s market." The median sales price on all new and resale homes and condos hit $365,000 last month, down 1.4% from $370,000 in August and down 7.6% from $395,000 in September of 2010. Before the real estate meltdown, the peak home price in the Bay area hit $665,000 in June/July of 2007. The peak low was $290,000 in March of 2009. Foreclosures accounted for 25.6% of all resales in September, while short sales made up 20.1% of Bay Area resales. Government-insured FHA home purchases made up 21.8% of the resales market in September, down from 24.1% last year, but up slightly from August. About 33.5% of Bay Area sales last month were sold for $500,000 or more, down from 35.5% in August and 38% from last year. Write to Kerri Panchuk.