The San Diego housing market is shifting. After four years of frozen mobility, volatile mortgage rates, and affordability challenges, 2026 marks a return to steadier conditions across San Diego real estate. For buyers and sellers navigating San Diego neighborhoods like Banker’s Hill, Mission Hills, La Jolla, and Coronado, understanding these market dynamics helps shape smarter real estate decisions throughout the year.
A Market That's Finding Its Balance
The extremes of the early 2020s are fading. Across the San Diego real estate market, inventory is normalizing, mobility is picking up, and buyers and sellers are resetting expectations after years of dramatic swings. San Diego home sales are positioned to grow for the first time since the pandemic, while affordability is beginning to improve through a combination of flat home prices, rising incomes, and gradually easing mortgage rates.
This shift is not driven by a dramatic correction. Instead, the San Diego housing market is experiencing steady rebalancing over time.
Four Signals That Matter in 2026
Inventory Growth
Nationally, the number of homes on the market could grow by 10%, giving buyers more options and improving negotiating power. In San Diego real estate, where inventory varies sharply by neighborhood, this growth creates distinct opportunities depending on location, property type, and price point.
Flat Home Prices
San Diego home prices are expected to rise modestly by just 0.5% this year. That limited appreciation, paired with faster income growth, supports improved affordability without requiring a housing crash or significant price reductions. For buyers watching the San Diego real estate market, this signals a more stable entry point.
Mortgage Rates Easing
Mortgage rates are expected to trade between 5.9% and 6.9%, averaging around 6.4% for the year. This range offers San Diego home buyers a more favorable financing environment than they’ve experienced in recent years and supports renewed buyer confidence.
Rising Home Sales
Home sales could reach 4.25 million nationwide, a 5% increase from 2025. As rates ease and inventory improves, more buyers are returning to the market. In San Diego, this translates to healthier transaction volume and renewed movement across both coastal and urban neighborhoods.
The Great Stay Begins to Thaw
Since 2022, Americans have been moving far less than usual. Higher mortgage rates, economic uncertainty, and affordability challenges stalled activity nationwide and across the San Diego housing market. This period, often called “The Great Stay,” reshaped migration patterns and constrained housing inventory.
Now, signs of a thaw are emerging. Mortgage rate lock-in is fading, and San Diego buyers are becoming more educated on financing strategies such as seller-paid 3-2-1 interest rate buydowns that can secure interest rates as low as 3.5%.
Work-from-home flexibility has endured, allowing greater mobility. In San Diego real estate, where lifestyle, climate, and location strongly influence housing decisions, this shift creates new opportunities for both buyers and sellers.
Shadow Inventory and Shadow Demand
Market data reveals pent-up activity waiting for the right conditions. By November 2025, nearly 60% of listings nationwide were withdrawn. Many of these sellers were prepared to move but chose to wait, creating what’s known as shadow inventory. At the same time, purchase mortgage applications rose 15 to 25% year-over-year, while closed sales increased only 2 to 4%. Buyer interest far outpaced completed transactions, fueling shadow demand.
An estimated 150,000 additional homeowners nationwide are likely to sell once conditions improve. In the competitive San Diego real estate market, this suggests additional inventory may enter the market as confidence builds.
What This Means for San Diego Neighborhoods
Each San Diego neighborhood responds differently to market shifts. Mission Hills buyers continue to prioritize charm, architectural character, and thoughtful maintenance. Downtown San Diego buyers seek modern living, open layouts, and abundant natural light. La Jolla buyers focus on ocean views, outdoor space, and functional floorplans, while Coronado buyers emphasize coastal lifestyle, proximity to the beach, and outdoor living.
As San Diego real estate inventory grows and affordability improves, buyers across these neighborhoods gain more choice. Sellers who understand what buyers value in their specific area can position their homes more strategically and competitively.
Preparing for a Steadier Market
After years of volatility, 2026 brings a more predictable San Diego housing market. Buyers can approach purchases with greater confidence, knowing inventory is improving and mortgage rates are stabilizing. Sellers can prepare their homes with clarity, understanding that buyers are returning but remain selective.
The market is entering a new era where the deep freeze of recent years begins to thaw. For those considering buying or selling in San Diego real estate, this year presents renewed opportunity.
Guidance for a Confident Move in San Diego
Navigating the San Diego housing market requires insight into both neighborhood-level trends and broader economic shifts. The Comiskey Group brings that expertise to every stage of the buying and selling process, helping clients move forward with clarity, confidence, and strategy. For buyers and sellers preparing for a move in 2026, connect with The Comiskey Group to explore your opportunities in today’s evolving San Diego real estate market.
