San Diego’s housing market is entering a new phase as 2025 winds down. After a year marked by big price swings and shifting buyer behavior, fall is revealing a more tempered—and slightly unpredictable—real estate landscape. Home prices have eased, inventory is retreating after months of buildup, and properties are starting to sell a bit faster as buyers adapt to the seasonal slowdown.

Whether you're planning to buy, sell, or simply monitor local trends, here’s a clear breakdown of what’s changing—and what it means for the months ahead.

Home Prices Pull Back After a Heated Summer

San Diego saw a noticeable cooling in home prices in September 2025, marking the first annual decline after months of strong growth. The median price dipped below $1 million, sliding from summer highs and falling modestly year over year.

Although a 1% decline may sound small, it’s a meaningful shift when viewed in context:

• Prices surged massively early in the year
  
  

• The summer brought volatility and rapid month-to-month changes
  
  

• The fall decline signals that buyers are again gaining leverage
  
  

This new pricing landscape suggests sellers are becoming more flexible. Homes are still valuable, but the bidding wars and frenzied price jumps seen in past years have eased—for now.

Inventory Shrinks Significantly as Fall Takes Hold

One of the biggest developments this season is the sudden tightening of inventory. After months of growth that peaked during spring and summer, active listings have dropped sharply through early fall.

This kind of decline is typical heading into the colder months, but the speed of the pullback is notable:

• Listings dropped by more than 10% in a single month
  
  

• Inventory is still higher than last year, but falling quickly
  
  

• Seller hesitation is rising as winter approaches
  
  

If this trend continues, buyers may face more competition at a time when they typically expect more breathing room. For sellers who remain active, reduced supply could work in their favor.

Homes Begin to Sell Faster Again But Still Slower Than Last Year

After a steady increase in days on market throughout the summer, homes began selling slightly faster in September. This improvement may indicate renewed buyer interest driven by:

• Adjusting prices
  
  

• Lower inventory
  
  

• Seasonal urgency before the holidays
  
  

However, the broader picture shows a slower-moving market than in 2024. Homes still sit on the market significantly longer than they did a year ago, signaling that buyers are more patient and selective than during the ultra-competitive periods of the past.

A Balanced Market With Signs of Tipping Toward Sellers

According to Months of Supply Inventory (MSI)—the key metric used to determine market conditions—San Diego remains in balanced territory. At just over three months of supply, the region isn’t clearly favoring buyers or sellers.

But the trendline tells a slightly different story:

• MSI has declined from summer highs
  
  

• Month-over-month tightening points toward growing seller advantage
  
  

• Year-over-year decline in MSI marks a potential turning point
  
  

If inventory continues to shrink faster than demand declines, the balance may tilt back toward sellers sooner than expected—especially during winter, when fewer listings typically enter the market.

What This Means for Buyers and Sellers

For Buyers:

You may benefit from softer prices now, but shrinking inventory could increase pressure as winter approaches. If you’re serious, monitoring new listings closely will be key.

For Sellers:

You’re entering the market at a moment when supply is falling, days on market are improving, and buyers are adjusting to new price levels. Pricing strategically—not aggressively—will help maximize your advantage.

For Homeowners Watching the Market:

The fall slowdown, combined with tightening supply, suggests that 2026 could begin with upward pressure on prices—especially if rates stabilize or fall further.