San Diego Housing Market Looks Normal

San Diego Real Estate Market Round-Up – Week of November 21–27, 2025

Last week, I began a deeper dive into the rapidly shifting macro trends and how they may impact our local real estate market in 2026. I lay out where my head is at so far in this week’s update.

Weekly Snapshot (Nov 21–27, 2025)

(Source: SDAR & Mortgage News Daily)

Weekly new pending sales exceeded the number of new listings for the first time since Christmas week last year. In the most recent data, new listings came in sharply lower than the prior four-week average, while pendings only softened modestly. Active inventory also ticked down, and the average 30-year fixed rate improved slightly week over week. Taken together, that is the first real sign in a while that demand is starting to lean into limited supply again, even in a holiday-shortened week.

As you can see in the chart below, it happens every year:

(Source: Real Report)

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Why Q1 Often Rebounds

Every year in San Diego, we see a fairly reliable pattern: the market cools off in November and December, then starts to reawaken in January. This year looks like no exception. We typically get fewer new listings over the holidays as sellers hit pause for travel, family, and year-end distractions. Buyer activity also slows, but not always to the same degree.

This is why it can feel like the market “jumps” in Q1. It is not that something magical happens in January – it is that a backlog of buyers who have been watching and waiting finally re-engage just as new listing activity begins to climb again from holiday lows. Even if prices look a bit softer at the end of the year, that early Q1 bump in demand often stabilizes values and, in stronger years, pushes them higher into the spring.

This year, I expect that familiar story to play out again: some price compression into late Q4, then an early 2026 recovery as more buyers and sellers step back in. If you look at past years, the pattern is remarkably consistent – which is why I am not overreacting to short-term holiday-week volatility in the data.

Inventory vs. Demand Matters

The more important story beneath the week-to-week noise is the relationship between inventory and demand. In the most recent numbers, new listings dropped sharply, while new pendings held up relatively well and even exceeded new listings. That almost never happens this late in the year unless demand is more resilient than the headlines would suggest.

Active inventory also moved lower, which tells me that buyers are still absorbing supply, even as affordability remains a challenge. The bigger context: in 2023, we saw pendings beat new listings almost every week. In 2024, it happened multiple times. This year, it has been much rarer, which is why this most recent week stands out. The dynamic has clearly changed over the last two years – buyers are more rate-sensitive, more price-conscious, and more selective.

Still, when inventory pulls back more sharply than demand, it does not take a huge surge in buyers to firm up prices. That is the situation we appear to be heading into for early 2026: not a runaway seller’s market, but a market where well-priced, well-presented homes can still draw strong interest while overreaches sit and get passed over.

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Mortgage Rates: The Wildcard

Mortgage rates continue to be the biggest swing factor in the outlook. Recently, the average 30-year fixed dipped into the low 6s, landing around 6.22% before bouncing back closer to the 6.25%–6.50% range that we have been living with since late summer. The move lower was driven by softer economic data, cooler producer-level inflation (PPI), and a drop in consumer confidence to the lowest level since last April.

At the same time, we saw a broad risk-off day in the markets where stocks, crypto, and bonds sold off together, pushing rates back up toward the mid-6s. That is a good reminder that rate improvement is not a straight line. There will be weeks where bonds rally on bad economic news, then give some of that back when markets digest new data or shift expectations around the Fed.

My base case is that the non-AI portion of the economy is sluggish enough to keep downward pressure on long-term rates over the next six months. I think it is reasonable to expect an average 30-year fixed rate under 6% sometime in the first half of 2026, and that is the scenario I am watching most closely for Q1 and Q2.

How’s Wesley Feeling About The Market Right Now?

Short term, I expect more of the same: year-end noise, a bit of price softening, and pockets of opportunity for buyers who are willing to move when something good hits the market. I am not expecting a sudden surge in values between now and New Year’s, but I also do not see a major reset on the horizon for San Diego specifically.

Over the next three months, I expect nominal values to end up about 1–2% below October levels by the end of January as the seasonal slowdown runs its course. By six months out, I think we will see more sellers come to market, some of them driven by financial stress or lifestyle changes. If rates are indeed under 6% by then, that combination points to a market with slightly more activity and modest price growth in the roughly 1.5%–3% range off the January base.

Looking 12 months out, I still expect our usual pattern where prices peak around May and ease back into the fall. By October 2026, values could be 2–4% lower year-over-year at that point, even if the market feels reasonably active. Affordability is still stretched, and that is not going away overnight. Any deterioration in employment, especially where AI and automation displace more jobs than they create in the short run, will add pressure to certain segments of the buyer pool.

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Macro & Local Notes

On the macro side, bonds have been reacting strongly to every piece of economic data. We have seen weaker job market signals, cooler wholesale inflation, and softening consumer confidence – all supportive of lower rates over time. At the same time, we have had days where markets sell off across the board, reminding us that volatility is still very much in play.

Black Friday online sales came in at a record high, which some interpret as a sign of strength. I lean the other way: given softer retail sales leading up to the holiday, I think record online spending is more about consumers stretching their dollars with discounts than it is about a booming consumer.

Locally, the affordability gap in San Diego is still widening. Home prices have outpaced wage growth for years, and that divide grew again this year. That does not mean demand disappears – San Diego is still highly desirable – but it does mean more buyers are making tradeoffs on location, size, and property type, or waiting longer to enter the market.

There are also global factors worth watching, like the unwinding of the yen carry trade, which could have implications for both stocks and bonds. These macro shifts do not change the fact that real estate is a very local asset, but they do influence the cost of money, and that ultimately matters for every buyer and seller here in San Diego.

Buyer & Seller Strategy Corner

If you are a buyer right now, the combination of slightly lower rates, fewer competing buyers over the holidays, and motivated year-end sellers can create real opportunities. This is a good window to lock something in before a potential Q1 pickup in activity. Focus on homes that have been sitting a bit longer, or that just came on in late November and early December with realistic pricing. Be prepared to negotiate on credits instead of just price, especially if the property needs cosmetic work.

If you are a seller, the key is to price and present your home as if you are in a market where buyers have choices – because they do. The right listing strategy now is not to chase the very top of the last comp, but to position slightly under the obvious competition and make your home the clear value in its segment. Clean presentation, professional photos and video, and strategic timing around holidays all matter more when buyers are being picky.

Looking ahead to early 2026, both sides should be planning for a market that is active but not overheated. If rates do break below 6%, I expect more buyers to step off the sidelines, but I also expect more listings from owners facing financial pressure. That should create a lot of movement without necessarily sending prices sharply higher. Having a plan now – whether you are trading up, downsizing, or buying your first place – will matter more than trying to time the exact bottom or top.

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Final Thoughts

This week’s data is the first real sign in a while that demand is starting to lean back into limited inventory, even in the middle of the holiday slowdown. Pendings beating new listings is not a one-week “all clear,” but it does fit the pattern I expect to see as we head toward Q1. Short term, we will likely continue to see choppy numbers and some price softness. Medium term, I still see a path where slightly lower rates and steady demand support a healthier, more balanced San Diego market in 2026.