SD Housing Market in a `Holding Pattern,’ as Higher Rates Keep Buyers, Sellers `Muted’ for now, says SDAR

Economic uncertainty and slightly higher mortgage rates are keeping the spring housing market in a “holding pattern,” according to local real estate industry officials.

In its monthly report on the residential real estate market, the Greater San Diego Association of Realtors (SDAR) reports the median sales price for single-family detached homes in San Diego County remained flat at $1,099,500 in May 2026, which compared to $1.1 million in April and March 2026, $1,089,795 in February 2026 and $1,070,000 in January 2026.

The median sales price in May 2026 for attached homes, including townhomes and condos, was $675,000, which compared to $680,000 in April, 670,000 in March, $660,000 in February and $632,000 in January 2026.

SDAR said the median sales price in San Diego County for all types of residential properties, including single-family homes, townhomes and condos, remained flat at $900,000 in May 2026, which was the same figure in April, March, February and January 2026 and the 2025 months of December, November, October, September, August, July, June and May.

In a year-over-year comparison between May 2026 and May 2025, the median sales price for all property types including single-family homes, townhomes and condos, was higher by 1.3%, which was a slight decrease from the previous month’s year-over-year increase of 1.7%, said SDAR.

The median is the point at which half the homes sold for more and half for less.

“Even though mortgage rates are lower from a year ago, the higher rates are likely keeping home buying and selling activity in a holding pattern, muted for now,” said Karen Van Ness, 2026 SDAR President. “Higher rates coupled with economic and global uncertainty has given some buyers and sellers `cause to pause,’ thus, stalling the housing market to a degree. But, we are expecting some relief from mortgage rates during the summer home-buying season.”

SDAR’s report said closed sales in May 2026 decreased 1.9% for detached homes, but increased 4.0% for attached homes.

Compared to the previous month of April, closed sales decreased 3.5% for detached homes and 1.6% for attached homes, a contrast to increases in March 2026 by 5.2% for detached homes and 9.7% for attached homes.

The price range with the largest gain in closed sales for detached homes in May 2026 was the $5 million-and-above range with a 21.8% increase, which was higher than April’s increase of 12.3%.

For all property types in San Diego in May 2026, SDAR said closed sales increased 0.1% year-over-year and the median sales price increased 1.3% year-over-year.

“It appears that buyers and sellers have readjusted to an environment with higher rates. Some are returning to the market with a sense of cautious optimism,” said Van Ness. “New listings are rising and pending sales remain steady as sellers are pricing for current conditions and adopting more realistic pricing strategies from the start.

“Allowing buyers to negotiate price reductions and seller concessions is helping deals cross the finish line. Discounts are becoming a bit less common.”

SDAR’s monthly report also said the price range that tended to sell the quickest in May 2026 was 37 days for single-family detached homes priced at between $750,000 and $1 million.

Meanwhile, the price range that tended to sell the slowest in May 2026 was single-family detached homes prices at $5 million and above, which took 78 days to sell. In comparison, the timeframe for single-family detached homes priced at $5 million and above in April was 75 days. March and February of 2026 was 76 days. Timeframes for other months included 74 days in January 2026 and December 2025, 75 days in November 2025, 72 days in October 2025, 66 days in September 2025 and 62 days in August 2025.

For the 12-month period spanning from May 2026 to June 2025, pending sales for all property types in San Diego County were up 2.9% overall, a contrast to a 1.6% increase between April 2026 to May 2025, 0.5% increase between March 2026 and April 2025 and a decrease of 1.0% between February 2026 and March 2025.

The strongest increases for pending sales posted in May 2026 included 21.8% for detached homes priced at $5 million and above, 9.7% for detached homes sized at between 4,001 and 6,000 square feet and 4.6% for condos and townhomes.

Pending sales all detached homes decreased 5.0% and 8.6% for attached homes. A pending sale means the seller has accepted an offer from a buyer, but the transaction is not yet finalized.

“Sellers are showing sensitivity to the market with lower list prices and fewer price reductions. It is obvious that sellers are doing their homework before listing,” Van Ness said. “Well-priced properties are drawing multiple, competitive offers and keeping the market tilted in sellers’ favor and reinforcing the seller-friendly conditions.”

Inventory levels in San Diego County for all property types have decreased the past four months, including 12.4% in May, 12.8% in April, 11.2% in March and 15.4% in February.

The property type with the largest gain in inventory was the condo-townhome segment with an increase of 5.6%.

“Rising wages and lower inflation are offering better conditions for prospective homebuyers,” said Van Ness. “Income growth is outpacing home price gains while prices have remained stable. The anemic supply of housing is definitely the larger issue that needs critical attention. Housing affordability challenges will continue to plague us until the housing supply is increased.”

Nationally, inventory climbed 5.8% month-over-month and 1.4% year-over-year, with approximately 1.47 million properties listed for sale heading into May, according to the National Association of Realtors (NAR). At the current sales pace, that represents a 4.4-month supply, reflecting a modest improvement in inventory conditions compared to a year earlier. Homes spent a median of 32 days on the market, down from 41 days the previous month, while the median existing-home price increased to $417,700, up 0.9% from a year ago.

NAR also said U.S. pending home sales increased for the third straight month, rising 1.4%, led by gains in the Northeast, Midwest and West. On a year-over-year basis, pending sales were up 3.2%, with contract activity increasing in the Midwest, South, and West.

For more housing market and economic data, visit www.sdar.com.