Is the San Diego housing market about to fall off a cliff, or is it poised for another climb? The headlines are a mess. This article cuts through the noise to deliver a clear, data-driven forecast for San Diego home prices in 2026, based on rigorous analysis—not speculative nonsense. The thesis is simple: 2026 will reward strategy and data-driven execution, and our models point toward modest, sustainable appreciation. For a complete breakdown of our methodology, you can review our data-driven forecast.

The 2025 Foundation: Understanding Today’s Market to Predict Tomorrow’s

To create a reliable 2026 forecast, you must first have a deep understanding of the 2025 market. Consider 2025 the year of “recalibration.” The post-pandemic frenzy—that wild period of over-asking offers and waived contingencies—has subsided. In its place, we have a more predictable market cadence, a “new normal” that sets the stage for the year ahead.

2025 San Diego Market at a Glance: Key Metrics

The data from 2025 illustrates a market achieving a new equilibrium, moving away from the extreme seller’s market of previous years. Here are the key performance indicators:

• Median Home Price: The median price has oscillated between $985,500 and $1,021,000, with more recent data showing median listing prices around $927,000 [2]. This fluctuation signals stabilization rather than a dramatic price freefall.

• Velocity of Sales: Homes have been reaching pending status in a median of 27-32 days, reflecting a healthy and active market where well-priced properties still move efficiently.

• Inventory Levels: While inventory has increased from historic lows, the market remains competitive due to persistent buyer demand. For a more detailed breakdown, you can review the latest Cassity Data Drop.

Market Dynamics: From “Explosion” to “Equilibrium”

The market has transitioned from the hyper-competitive “Explosion” phase of 2020-2023 to today’s more balanced “New Normal.” Let’s be clear: this “cooling” is a necessary recalibration, not a collapse. It creates a healthier market where strategy determines success. Homes are taking slightly longer to sell, now averaging around 40 days on the market, which gives buyers a moment to breathe and even regain some negotiating power [2].

Core Economic Drivers for the 2026 Forecast

Several key factors will shape the trajectory of San Diego home prices in the coming year. These are the core drivers our team watches obsessively.

Interest Rate Trajectory and Buyer Affordability

Mortgage rates are the ultimate gatekeeper of housing affordability. Averaging around 6.4% in late 2025, projections for 2026 suggest they may continue a slow decline toward 6.1% [5]. While this may not seem dramatic, even a fractional reduction in borrowing costs significantly boosts buyer purchasing power and can stimulate a new wave of demand.

Analyzing the S&P Case-Shiller Home Price Index

The S&P Case-Shiller Index is a critical benchmark for tracking residential real estate price changes. As of September 2025, the San Diego index value was 437.78, reflecting significant long-term appreciation. A recent marginal dip to 435.24 is not a sign of a downturn; rather, it illustrates the market stabilization we’ve been discussing [2]. It shows the market taking a breath before its next move.

Inventory Levels and Fundamental Demand

San Diego’s housing supply remains fundamentally constrained, partly due to the “lock-in effect” where homeowners are hesitant to sell and give up their low-interest mortgages. Contrast this with the region’s robust economy, fueled by tech and biotech, which continues to drive population growth and create persistent demand [6].

However, it’s not entirely straightforward. Some data shows housing inventory has actually doubled over the last year and a half, yet prices have remained stubbornly high [8]. This unusual dynamic points to a strange but resilient market where a structural imbalance between supply and demand supports long-term price stability.

The 2026 San Diego Home Price Forecast

Synthesizing these data points and economic indicators allows for a clear, actionable projection for 2026. While no one has a perfect crystal ball, a data-backed forecast is infinitely better than a guess.

Expert Projections: What the Analysts Predict

Our analysis aligns with the consensus among many leading economists. However, it’s important to consider the full spectrum of predictions.

• NAR Chief Economist Lawrence Yun projects a 4% increase in median home prices nationwide for 2026.

• Many local San Diego forecasts anticipate moderate growth between 2.5% and 9%.

• To provide a balanced perspective, it’s worth noting some analysts predict a moderate decline, citing affordability constraints and high costs of ownership as headwinds [3].

Despite differing views, the consensus among most experts is that a 2020-style explosion is off the table, but so is a 2008-style crash. The most likely path is steady appreciation.

The Verdict: A Modest and Sustainable Rise

Based on our proprietary models, The Cassity Team forecasts that San Diego home prices will appreciate by a healthy but sustainable 3-5% through 2026.

What does this mean in real numbers? Based on a current median price of $1,000,000, this would place the new median price between $1,030,000 and $1,050,000 by the end of 2026. This stable growth provides a solid foundation for building wealth. It’s a reminder that even after a recent surge in San Diego home prices, the market continues to demonstrate underlying strength.

Your Strategic Playbook for the 2026 Market

This forecast isn’t just an academic exercise; it’s a strategic blueprint for you to execute. Whether you’re a buyer or a seller, 2026 is a market of opportunity for those who are prepared.

For Buyers: Leveraging a Balanced Market

The 2026 market offers a window of opportunity for disciplined, strategic buyers. The frenzy is over, and rational decision-making is back in style.

• Increased Deliberation Time: You have more time for due diligence without the intense pressure to make a snap decision.

• Enhanced Negotiating Power: With homes sitting on the market slightly longer, sellers are more amenable to negotiations on price, terms, and repairs.

• Access to Off-Market Opportunities: A key advantage in any market is access to properties before they hit the MLS. The Cassity Team’s proprietary network of over 30,000 agents provides just that.

Follow our social media to see how we uncover these opportunities and get your free Buyer Roadmap.

For Sellers: The Importance of Strategic Pricing and Positioning

For sellers, precise execution will be the difference between a good result and a great one. The days of putting a sign in the yard and collecting 15 offers are gone.

• Implement Data-Driven Pricing: Overpricing is the single biggest tactical error a seller can make in this market. Your pricing strategy must be based on hyperlocal data, not an online guesstimate.

• Develop a Compelling Value Proposition: Meticulous property preparation and professional, multi-platform marketing are non-negotiable. You must present a product that stands out.

• Maximize Asset Value: Our team specializes in positioning properties to attract the most qualified buyers and command top dollar.

With the right strategy, selling in 2026 remains a smart move to capitalize on your equity [1]. Our San Diego Selling Guide can help you navigate from initial valuation to a full-price offer.

Conclusion: Your Next Move in the San Diego Market

Our final analysis is clear: San Diego home prices are positioned for modest and sustainable growth in 2026. This is not a market for speculators or amateurs. It’s a market that rewards discipline, data, and expert counsel.

It’s time to move beyond ambiguous headlines. Partner with a team that translates complex data into a clear, actionable strategy tailored to your specific goals.

Ready to build your plan for 2026? Schedule a strategic consultation with The Cassity Team today.