San Diego Transitions Back to a Seller’s Market
After a year marked by fluctuating prices, rising inventory, and shifting buyer behavior, San Diego’s housing market is showing renewed momentum as we head into 2026. December data reveals strengthening prices, tightening inventory, and improving market balance — all signs that the market may be regaining confidence after a transitional year.
Let’s take a closer look at what’s happening locally.
December brought encouraging news for homeowners. The median single-family home in San Diego sold for $1,000,000 — a 2.56% increase compared to the same time last year.
This rebound is particularly notable given the uneven price performance seen earlier in 2025, when several months posted year-over-year declines. After navigating softer stretches in spring and early fall, the market appears to have found firmer footing in the final quarter.
The return to the $1 million threshold signals that demand remains resilient, even in the face of higher mortgage rates and broader economic uncertainty. As we move into the traditionally busy spring season, many will be watching closely to see whether this upward momentum continues.
While much of 2025 was defined by a buildup in housing supply, the story has shifted dramatically in recent months.
December ended with 4,222 active single-family home listings — still 14.17% higher than December of last year. However, the more important figure is the month-over-month change: inventory dropped nearly 16% compared to November.
This rapid contraction suggests that the excess supply accumulated during the summer months is being absorbed. Seasonal patterns certainly play a role — many sellers pause listings during the holidays — but the speed of the decline indicates tightening conditions.
If inventory continues to shrink at this pace, the balance between buyers and sellers could shift more noticeably as we enter peak buying season.
Throughout much of 2025, homes took longer to sell compared to the fast-moving market of 2024. In December, the median single-family home spent 27 days on the market — a 12.5% increase year-over-year.
However, there’s an important nuance: this figure improved slightly from November, when homes averaged 28 days on the market. While still slower than last year’s pace, the stabilization suggests buyer activity is picking up as inventory tightens.
Compared to the double-digit increases in days on market seen earlier in the year, this modest change points toward improving efficiency in the market. Buyers are still thoughtful and selective — but well-priced homes are moving with reasonable speed.
One of the clearest indicators of market direction is Months of Supply Inventory (MSI). In California, roughly three months of supply is considered a balanced market. Below that threshold typically signals a seller’s market.
As of December, San Diego stands at just 2.5 months of supply — down sharply from 3.2 months in November. That represents a nearly 22% month-over-month contraction, pushing the market back into seller-favored territory.
After spending much of 2025 in balanced or buyer-friendly conditions, this shift suggests sellers may once again hold greater negotiating power. That said, inventory remains higher than last year, which may prevent the extreme competitiveness seen in prior seller-dominated markets.
San Diego’s housing market appears to be entering 2026 with stronger fundamentals than many anticipated just a few months ago. Rising prices, tightening supply, and stabilizing market times indicate improving confidence among buyers.
However, the coming spring season will be pivotal. If new listings surge and inventory rebounds, balance could return quickly. On the other hand, if demand accelerates faster than supply, sellers may continue to gain leverage.
For buyers, acting before competition intensifies could prove advantageous. For sellers, pricing strategically while conditions remain favorable will be key.
San Diego’s housing market is ending 2025 with renewed strength. Median home prices have climbed back to $1 million, inventory is contracting rapidly, and months of supply have shifted back into seller’s market territory. While listings are still spending slightly more time on the market compared to last year, the trend is stabilizing — a sign that demand is regaining traction.
As we move into 2026, staying informed and adaptable will be essential. The spring season will reveal whether this late-year rebound marks the beginning of a stronger cycle — or simply a seasonal shift.
Either way, San Diego remains one of the most resilient real estate markets in the country.
Stay up to date on the latest real estate trends.
You’ve got questions and we can’t wait to answer them.