San Diego Housing: A Cooling Trend and What It Means for 2026
San Diego’s housing market is bucking the national trend, experiencing a sustained slowdown. Recent data reveals a 0.59% annual price decrease, a stark contrast to the 1.36% national average increase. This marks the sixth consecutive month of falling prices, according to the Case-Shiller index, with October seeing a marginal dip of 0.10%.
The Weight of Mortgage Rates and Inflation
The primary drivers behind this cooling are persistently high mortgage rates and an inflation rate that’s outpacing price growth. This combination is effectively moderating demand. Potential homebuyers are facing a double whammy: the cost to borrow money is high, and their purchasing power isn’t keeping pace with rising living expenses. The median price for a single-family home in San Diego County currently sits at $985,000.
Consider the example of Maria Rodriguez, a local teacher hoping to buy her first home. “I was pre-approved at 6.8% earlier this year,” she explains. “Now, rates are hovering around 7.25%, and that adds hundreds of dollars to my monthly payment. It’s pushed my timeline back indefinitely.” Stories like Maria’s are becoming increasingly common.
A Look at National Trends & Regional Differences
Nationally, the housing market is showing signs of stabilization, but the picture is uneven. Cities like Austin and Phoenix, which saw explosive growth during the pandemic, are also experiencing price corrections. However, areas with limited inventory, like the Northeast, continue to see price appreciation. San Diego’s situation is unique, influenced by its high cost of living and limited land availability.
According to a recent report by the National Association of Realtors (NAR), existing-home sales were down 5.7% in October, indicating a broader slowdown in activity. Read the full NAR report here.
The Potential for A Better 2026?
Despite the current slowdown, some analysts are cautiously optimistic about 2026. The expectation is that mortgage rates will gradually decline as the Federal Reserve manages inflation. Combined with a more moderate pace of price growth, this could improve housing affordability. However, a dramatic price surge isn’t anticipated.
“We’re likely looking at a period of stabilization rather than a significant rebound,” says Dr. Emily Carter, a real estate economist at the University of California, San Diego. “The market is correcting, and that’s not necessarily a bad thing. It’s creating opportunities for buyers who have been priced out for years.”
Impact on Different Segments of the Market
The slowdown isn’t affecting all segments of the San Diego market equally. Luxury properties are experiencing a more pronounced correction, while more affordable homes are holding their value relatively better. Condominiums and townhouses are also proving more resilient than single-family homes in some areas.
Investors are also becoming more cautious, with fewer all-cash offers and a greater emphasis on due diligence. This is leading to longer sales cycles and more negotiation between buyers and sellers.
Frequently Asked Questions (FAQ)
- Is San Diego still a good place to invest in real estate? Yes, but it requires careful consideration. Long-term prospects remain positive, but short-term volatility is likely.
- What is the current average mortgage rate in San Diego? As of November 2025, the average 30-year fixed mortgage rate is around 7.25%.
- Will home prices continue to fall in San Diego? Most experts predict a continued, but slowing, decline in prices through early 2026, followed by stabilization.
- What should I do if I’m planning to buy a home in San Diego? Get pre-approved for a mortgage, work with a knowledgeable real estate agent, and be prepared to negotiate.
Looking for more insights into the San Diego real estate market? Explore our comprehensive guide to local market trends.
Share your thoughts! What are your predictions for the San Diego housing market in 2026? Leave a comment below.
