San Diego home sales up in August as median prices edge down

San Diego County Housing Market Shows Signs of Resilience Despite Ongoing Challenges

Home Sales Edge Up as Prices Moderate, Mortgage Rates Begin to Decline

SAN DIEGO — San Diego County's housing market displayed cautious optimism in August 2025, as home sales increased modestly while median prices edged down from their July peak, according to the latest data from the California Association of Realtors (C.A.R.).

The county's housing market saw a 1.3% monthly increase in sales activity, offering a welcome reprieve after months of sluggish performance. However, the median sale price for existing single-family homes dropped to $1.02 million in August, down from $1.04 million in July, though still representing a slight annual increase from $1.01 million in August 2024.

Statewide Trends Signal Market Stabilization

California's housing market as a whole showed signs of recovery in August, with existing single-family home sales totaling a seasonally adjusted annualized rate of 264,240 units—a 0.9% increase from July's 261,820 sales, according to C.A.R.'s latest report. This modest improvement came as mortgage rates fell to 10-month lows, providing some relief to prospective buyers who had been waiting on the sidelines.

"Despite a softer-than-expected home buying season this year, a bounce back in pending sales last month is an encouraging sign that sales could improve the rest of the year," said C.A.R. President Heather Ozur, a Palm Springs REALTOR®. "Many prospective homebuyers have been holding out in hopes of lower mortgage rates, and the declining trend in rates observed in the last few weeks could be the nudge that draw them back to the market."

Mortgage Rate Environment Shows Promise

A key driver of the market's modest recovery has been the improvement in mortgage rate conditions. The 30-year fixed-rate mortgage averaged 6.59% in August, according to C.A.R.'s calculations based on Freddie Mac data. More encouragingly, rates have continued to decline in recent weeks, with some lenders now quoting rates below 6.5%.

Recent Federal Reserve actions have contributed to this downward trend. On September 17, 2025, the Fed implemented its first rate cut of the year, reducing the federal funds rate by 25 basis points to a range of 4.0% to 4.25%. This move, combined with signs of economic weakness, has pushed mortgage rates to their lowest levels since late 2022 in some cases.

According to Mortgage News Daily, the average 30-year fixed mortgage rate dropped to 6.29% following the release of weaker-than-expected employment data in early September, marking the biggest one-day drop since August 2024.

Market Conditions Remain Challenging

Despite these positive developments, the San Diego housing market continues to face significant headwinds. Sales volume remains well below historical norms, with some analysts noting that current activity levels are among the lowest recorded in decades for certain months.

Data from Attom Data Solutions revealed that San Diego County recorded just 2,357 home sales in July, representing the third-lowest July figure in 37 years of data. The sluggish sales pace has been attributed to the persistent disconnect between buyer expectations and seller pricing, with many homeowners reluctant to reduce prices significantly.

The median time to sell a home in San Diego County increased to 27 days in August, up from 17 days in the same month last year, reflecting the more balanced market conditions that have emerged as buyer demand has softened.

Regional Variations and Price Dynamics

San Diego's housing market shows considerable variation by sub-region and price point. While the county's overall median price declined monthly, the luxury segment (homes above $2 million) has demonstrated greater resilience, according to industry reports. Properties in top-rated school districts continue to command premium prices, with some areas seeing appreciation rates of 25-57% above district averages.

The market's inventory situation has shown signs of improvement, though supply remains below optimal levels. The Unsold Inventory Index for San Diego County was 3.3 months in August, slightly higher than the 2.8 months recorded in August 2024, providing buyers with somewhat more choice than in previous years.

Future Outlook and Expert Predictions

Industry analysts remain cautiously optimistic about the San Diego housing market's trajectory through the remainder of 2025. C.A.R. Senior Vice President and Chief Economist Jordan Levine noted that "with a slight uptick in the median price in August and a stabilization in the number of reduced-price listings last month, the market appears to have found a short-term balance between supply and demand."

National Association of Realtors Chief Economist Lawrence Yun has projected more significant improvement ahead, forecasting a 6% rise in existing home sales in 2025 and an 11% jump in 2026. For mortgage rates, experts predict the 30-year fixed rate will average 6.4% in the second half of 2025, potentially dropping to 6.1% in 2026.

Affordability Concerns Persist

Despite the recent moderation in prices and improvement in mortgage rates, affordability remains a significant challenge for many potential homebuyers in San Diego County. With a current homeownership rate of 51.7% as of Q2 2025—down from the 55.3% peak in 2006—many first-time buyers continue to be priced out of the market.

The combination of elevated home prices and mortgage rates that, while declining, remain well above the sub-3% levels seen during the pandemic era, continues to limit market accessibility for many households.

Conclusion

San Diego County's housing market in August 2025 reflected a market in transition, with modest improvements in sales activity and early signs that mortgage rate relief may be bringing some buyers back to the market. While challenges persist, particularly around affordability and inventory levels, the recent trends suggest that the market may be finding a more sustainable equilibrium after years of extreme volatility.

The coming months will be critical in determining whether the recent improvements can be sustained, particularly as the market enters its traditionally slower fall and winter seasons. Much will depend on the trajectory of mortgage rates, employment conditions, and whether sellers become more willing to adjust pricing expectations to match current market realities.

Market Analysis: Is San Diego Favoring Buyers or Sellers?

Current Status: Transitioning from Sellers to Balanced Market

After years of extreme seller dominance, San Diego County's real estate market is undergoing a significant shift toward more balanced conditions in late 2025. Key indicators suggest we're in the middle of a market transition that could benefit both buyers and sellers, depending on their specific circumstances.

Sellers Market Indicators Still Present

  • Limited Inventory: Active listings remain below historical norms despite 47% year-over-year growth
  • Premium Pricing: Median prices holding near $1 million+ levels
  • Quick Sales in Prime Areas: Homes in top-rated school districts still command bidding wars
  • Luxury Resilience: High-end properties ($2M+) continue showing strength with 68% cash buyers

Buyers Market Signals Emerging

  • Increased Negotiation Power: Sales-to-list ratio dropped to 98.3% in August vs. 100% last year
  • More Time to Decide: Median days on market increased to 27 days from 17 days year-over-year
  • Price Reductions: 36-44% of listings now show price cuts
  • Growing Inventory: 23.5% more homes available than August 2024
  • Mortgage Rate Relief: Rates falling toward 6% range from 7%+ peaks

Market Transition Indicators

What's Driving the Shift?

  • Affordability Pressure: Many buyers priced out at current price/rate combinations
  • Rate Sensitivity: Buyers increasingly waiting for sub-6% mortgage rates
  • Seller Adaptation: Growing willingness to negotiate as homes sit longer
  • Economic Uncertainty: Both sides taking "wait and see" approach

Regional Variations

  • Coastal Areas: Still lean seller-favorable due to limited supply
  • Inland Communities: More balanced, with buyers gaining leverage
  • Entry-Level Market: Shifting toward buyers as affordability matters most
  • Luxury Segment: Remains seller-dominated with cash transactions

The Timing Question: When to Buy or Sell?

Should Buyers Wait or Act Now?

Case for Acting NOW (Next 3-6 Months):

  • Mortgage rates at 3-year lows (6.1-6.3%) may have bottomed out
  • Inventory at best levels since 2022 (47% more choices)
  • Negotiation power returning with less competition
  • Risk that rates reverse upward or inventory gets absorbed

Case for Waiting (6-12 Months):

  • Fed may push mortgage rates toward 5.5-6.0% range
  • Price corrections likely to continue beyond current $20K drop
  • Winter months (Nov-Feb) historically offer 5-10% more negotiation leverage
  • Economic uncertainty could further cool seller demand

Optimal Buyer Timeline: Peak conditions expected January-March 2026

  • Seasonal low demand + potential sub-6% rates + maximum seller motivation

Should Sellers Rush to Market?

YES - But Act Fast, Price Smart

Why sell now:

  • Still a seller-advantaged market despite transition
  • Median prices holding near historic highs ($1.025M)
  • Competition from other sellers will increase as rates drop further
  • Spring 2026 could bring flood of new listings as market fully rebalances

Critical seller strategy:

  • List by November 2025 to beat the spring rush
  • Price 3-5% below comparable recent sales to attract rate-sensitive buyers
  • Offer rate buy-downs or closing cost assistance
  • Accept that 2021-2022 appreciation levels are over

Warning signs for sellers who wait:

  • More inventory coming to market as rates drop
  • Buyers gaining confidence and leverage
  • Risk of being one of many similar listings in spring 2026

The Bottom Line

For Sellers: Last call for premium conditions

  • List now through early 2026 before full market rebalancing
  • Price aggressively to stand out in transitioning market
  • Consider incentives to help buyers with financing costs
  • Don't chase 2022 peak prices—those days are over

For Buyers: Good conditions getting better

  • Start shopping now but peak advantage coming Q1 2026
  • Get pre-approved and focus on motivated sellers (60+ days on market)
  • Don't wait indefinitely—perfect timing doesn't exist
  • Balance rate improvements against increased competition

Market Forecast: Full rebalancing by spring 2026

The window is closing for sellers to capitalize on favorable conditions, while buyers should prepare for optimal conditions in early 2026—but shouldn't wait indefinitely if they find the right opportunity now.

Analysis based on August 2025 data from California Association of Realtors, local MLS statistics, and market trends research. 

Sources

  1. California Association of Realtors. (2025, September 22). "California home sales rebound in August as lower rates lift demand, C.A.R. says." Press Release. Retrieved from: https://www.prnewswire.com/news-releases/california-home-sales-rebound-in-august-as-lower-rates-lift-demand-car-says-302563190.html
  2. Times of San Diego. (2025, September 22). "San Diego County home sales up in August as median prices edge down." Retrieved from: https://timesofsandiego.com/business/2025/09/22/san-diego-county-home-sales-up-in-august-as-median-prices-edge-down/
  3. NBC 7 San Diego. (2025, September 22). "Home prices declined in San Diego County last month." Retrieved from: https://www.nbcsandiego.com/news/local/home-prices-declined-in-san-diego-county-last-month/3904875/
  4. The San Diego Union-Tribune. (2025, September 18). "'Disconnect between buyers and sellers': San Diego home sales near record lows." Retrieved from: https://www.sandiegouniontribune.com/2025/09/18/disconnect-between-buyers-and-sellers-san-diego-home-sales-near-record-lows/
  5. Redfin. (2025). "San Diego Housing Market: House Prices & Trends." Retrieved from: https://www.redfin.com/city/16904/CA/San-Diego/housing-market
  6. Freddie Mac. (2025). "30-Year Fixed Rate Mortgage Average in the United States." Primary Mortgage Market Survey. Retrieved from: https://fred.stlouisfed.org/series/MORTGAGE30US
  7. CNBC. (2025, September 5). "Mortgage rates see biggest one-day drop in over a year." Retrieved from: https://www.cnbc.com/2025/09/05/mortgage-rates-drop.html
  8. CBS News. (2025, September 17). "Mortgage interest rates just fell to a 3-year low. Here's why (and what to do now)." Retrieved from: https://www.cbsnews.com/news/mortgage-interest-rates-fall-3-year-low-september-2025/
  9. firsttuesday Journal. (2025, August 29). "San Diego housing indicators." Retrieved from: https://journal.firsttuesday.us/san-diego-housing-indicators-2/29246/
  10. NORADA Real Estate. (2025). "San Diego Housing Market: Forecast and Trends 2025-2026." Retrieved from: https://www.noradarealestate.com/blog/san-diego-real-estate-market/
  11. San Diego home sales up in August as median prices edge down

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