Bay Area Housing Market Update, October 26, 2026: 7% Rates, Rising Inventory and a Two-Speed South Bay

The South Bay housing market is heading into the end of 2026 in an unusual spot. Mortgage rates have climbed back above 7%, the number of homes for sale has risen noticeably from a year ago, and Santa Clara County’s median price is down from last fall. Meanwhile, San Francisco and San Mateo County prices are hitting double-digit gains and luxury homes across the region are selling fast. Here is what the newest numbers say as of October 26, 2026, and what they mean if you plan to buy or sell in San Jose and Silicon Valley over the next few months.

View across the Santa Clara Valley toward the San Jose skyline, Bay Area housing market October 2026 — Photo: Michael from San Jose, California, USA / Wikimedia Commons, CC BY 2.0

The Big Picture: Late October 2026 at a Glance

The headline numbers come from the most recent monthly reports (which cover September sales, published in October) and the latest weekly mortgage survey:

30-year fixed mortgage rate: 7.32% for the week of October 22, down from 7.40% the week before but well above the 6.19% of a year ago (Freddie Mac).
15-year fixed rate: 6.68%, compared with 5.44% a year ago (Freddie Mac).
Bay Area median price: $1,325,000 in September, up 1.9% from a year earlier, while regional sales fell 3.1% year over year (California Association of REALTORS®).
Santa Clara County single-family median: about $1.88 million to $1.97 million depending on the data source, which is roughly 1.5% to 4% lower than September 2025.
Santa Clara County condo/townhome median: $862,500, down 8.1% year over year (RE Report / Pope Handy).
Active listings in Santa Clara County: up about 18% from a year ago for both single-family homes and condos (RE Report).
San Jose: median sale price of roughly $1.35 million (down 5% year over year), with homes going under contract in a median of 22 days and 46% selling above list price (Redfin).

Put simply, the South Bay is still competitive by national standards, but buyers have more room to negotiate than they’ve had in several years, especially on condos and townhomes. Sellers now need sharper pricing and better preparation.

Mortgage Rates Back Above 7%: The Biggest Story This Fall

Financing costs are shaping this market more than anything else. Freddie Mac’s Primary Mortgage Market Survey, released October 22, put the average 30-year fixed rate at 7.32%. That’s a small improvement from 7.40% the prior week, but it’s more than a full percentage point higher than a year ago. NBC Bay Area reported earlier this month that rates had recently touched as high as 7.5%, and local agents told the station that high prices combined with high rates are squeezing affordability, especially for first-time buyers.

On a South Bay price point, that gap is a big deal. Rough illustration: on a $1,000,000 loan, the principal-and-interest payment at 7.32% is about $6,870 a month, compared with roughly $6,120 at 6.19%. That is around $750 more per month, or about $9,000 a year, for the same loan amount. (These are estimates for illustration only. Your actual payment depends on your loan terms, taxes and insurance, so talk with a lender about your own numbers.)

Rates affect sellers too. Santa Clara County Assessor Neysa Fligor, discussing this year’s record assessment roll with San José Spotlight on October 25, warned that “the cost of money (mortgage rates) will be significant” and could hold back sales going forward.

Santa Clara County: Prices Dip, Inventory Builds

Single-family homes

Three respected sources measured September a little differently, but they all point the same way: prices are slightly lower than last fall while sales are holding steady.

Santa Clara County Association of REALTORS® (SCCAOR): median single-family price of $1,880,000, down 4% year over year but up 1.6% from August. There were 726 sales (up 3.7% from a year ago) and an average of 27 days on market.
California Association of REALTORS® (C.A.R.): Santa Clara County median of $1,920,000, down 4.0% year over year and up 1.1% month over month, with sales up 1.5% from a year ago.
RE Report (Pope Handy, Santa Clara County MLS data): median of $1,965,500, down 1.5% year over year, with 644 sales and 26 days on market.

The bigger shift is on the supply side. RE Report counted 993 active single-family listings in September, up 18.6% from a year earlier, and its “days of inventory” measure rose 19% to 45 days. At the metro level, Realtor.com data published by the St. Louis Fed (FRED) shows 2,112 active listings across the San Jose–Sunnyvale–Santa Clara area in September, up from 1,981 in August.

Condos and townhomes

The condo and townhome segment is clearly softer. RE Report put the county’s September condo median at $862,500, down 8.1% year over year, and condo sales fell 9.4%. Condos took an average of 39 days to sell, and active condo listings rose 17.9% to 711. Days of inventory jumped 30% to 89 days.

The assessor’s office is seeing the same trend. According to San José Spotlight, 24,727 Santa Clara County properties were given Proposition 8 “decline in value” status this year, nearly triple the year before, and most of them were condos and townhomes. In other words, many attached homes are now assessed below their factored Prop 13 base because market values have slipped.

Townhomes in the Cambrian neighborhood of San Jose, part of the South Bay condo and townhome market — Photo: Cristiano Tomás / Wikimedia Commons, CC BY-SA 4.0

A Two-Speed Bay Area

The South Bay slowdown stands out because other parts of the region are heating up. C.A.R.’s September figures show:

San Francisco: median $2,054,000, up 17.4% year over year, with sales up 6.2%.
San Mateo County: median $2,327,500, up 8.3% year over year.
Alameda County: median $1,265,000, up 1.2% year over year.
Santa Clara County: median $1,920,000, down 4.0% year over year.

Statewide, C.A.R. reported a September median of $899,720 (up 1.7% year over year), sales down 6.5% from a year ago, a median of 29 days on market and a 3.7-month Unsold Inventory Index. C.A.R. President Tamara Suminski said that “the market feels a little less rushed, giving buyers more time to carefully consider their options,” and Chief Economist Jordan Levine cautioned the state could see further softening in closed sales in the coming months.

At the top end, luxury property is still moving. NBC Bay Area, citing Zillow, reported that homes priced at $6.5 million and up are selling quickly, often to all-cash buyers drawing on stock and existing equity. “If you have equity that has been growing, you have higher buying power,” Zillow senior economist Kara Ng told the station. Compass agent Andrew Oldham described the result to San José Spotlight as a “K-shaped economy” that is “having a real impact in Santa Clara County”: well-capitalized buyers keep competing while rate-sensitive buyers pull back.

Silicon Valley’s Economic Backdrop

Despite softer home prices, there are signs of underlying strength. The Santa Clara County assessment roll for 2026–27 reached a record $760.1 billion, up 4.7% from last year, and residential property made up 82% of the value change. CBRE reported more than 4 million square feet of Silicon Valley office leasing in the third quarter, the most in any quarter since 2019, and office vacancy fell from 15.1% to 14.1%. Brokers credited much of that activity to investment tied to artificial intelligence.

San Jose by the Numbers

Within San Jose itself, Redfin’s September data shows a median sale price of about $1.35 million across all home types, down 5% from a year earlier. Homes are still moving quickly by national standards, with a median of 22 days on market (two days slower than last year). The average home sold for about 101% of list price, and 46.4% of homes sold above asking, down 2.5 percentage points from last year. Redfin rates San Jose “somewhat competitive,” with a Compete Score of 58 out of 100.

So the city is not in a buyer’s market, but it isn’t the frenzy of 2021–2022 either. Well-priced single-family homes in strong school areas still draw multiple offers. Homes that are dated, overpriced or on busy streets are sitting longer, and those are where buyers can negotiate.

What This Market Means for Buyers

If you have been waiting on the sidelines, fall 2026 offers some real openings, as long as your financing is solid.

More choice, less pressure. With county inventory up roughly 18% year over year, you have more homes to compare and somewhat less competition on each one, particularly after the first two weeks on market.
Condos and townhomes are the best value right now. With condo prices down about 8% year over year and 89 days of inventory, attached homes are the segment where buyers have the most leverage. Before you buy, read our guide to HOA rules and fees for San Jose condo buyers.
Negotiate terms, not just price. On homes that have been listed for a few weeks, ask for seller credits toward a rate buydown or closing costs. With rates above 7%, a credit can sometimes save you more per month than an equal price cut.
Stress-test your payment. Get fully underwritten pre-approval and budget at today’s rates. If rates fall later, refinancing may be possible, but don’t buy a home you can only afford if that happens.
Weigh renting against buying honestly. Our Rent vs. Buy in San Jose 2026 breakdown walks through the math for local households.

Traditional single-family homes in Evergreen, San Jose, a neighborhood popular with South Bay buyers — Photo: Cristiano Tomás / Wikimedia Commons, CC BY-SA 4.0

What This Market Means for Sellers

Sellers can still do very well in the South Bay, but the margin for error is smaller than it was a year ago.

Price for today’s buyers, not last spring’s. With medians a few percent below last year and more competing listings, overpricing is the fastest way to end up with a stale listing. Homes priced right still sell quickly, and nearly half of San Jose sales are still closing above asking.
Presentation matters again. When buyers have more options, they skip homes that need work. Targeted repairs, fresh paint, staging and pre-listing inspections help your home stand out.
Consider offering a rate buydown. Advertising a seller-paid buydown can widen your buyer pool at a time when monthly payments are the main obstacle for many buyers.
Condo and townhome owners need extra strategy. With condo inventory rising and prices down about 8%, it’s important to show your HOA’s financial health, highlight any upgrades and be realistic about timing.
Know your timing options. Listing during the holiday season means fewer competing homes and serious buyers. Waiting for spring usually brings more buyers but also more competition from other sellers. Our seller services page explains how we plan pricing and launch strategy.

City and Neighborhood Notes

San Jose

Detached homes in established neighborhoods like Willow Glen, Cambrian and Almaden Valley remain the most resilient segment. Condo-heavy areas, including parts of downtown and North San Jose, are where buyers will find the most negotiating room. See our San Jose real estate page for neighborhood guides.

Sunnyvale and Santa Clara

According to the county assessor, Sunnyvale’s assessed value grew more than 7% this year, one of the strongest gains in the county, while the City of Santa Clara grew about 3.7%. Being close to major tech campuses continues to support demand in both cities.

Frequently Asked Questions

Are home prices falling in San Jose and Santa Clara County?

Modestly, yes. September medians for Santa Clara County single-family homes were about 1.5% to 4% below a year earlier, depending on the source, and condos were down about 8%. Prices did rise slightly from August, so this looks more like a gradual correction than a sharp drop.

What are mortgage rates right now?

Freddie Mac’s survey for the week of October 22, 2026 put the average 30-year fixed rate at 7.32% and the 15-year at 6.68%. The rate you’re offered depends on your credit, down payment, loan size and loan type, and jumbo loans are common in the South Bay.

Is it a buyer’s market or a seller’s market in the South Bay?

It’s somewhere in between. Single-family homes still lean toward sellers, with median days on market in the 20s and many homes selling above list. Condos and townhomes have shifted closer to a balanced or buyer-leaning market.

Should I wait for rates to drop before buying?

Waiting could mean lower rates, but it could also mean more competition if rates fall and buyers return all at once. Today’s higher inventory and negotiating room are real advantages that may not last.

Is now a good time to sell?

For well-prepared, well-priced homes, yes. Demand is still healthy, and there are fewer competing listings in late fall and winter than in spring. Sellers who need a top-of-market price with minimal preparation may find this market less forgiving.

Plan Your Next Move With a Local Expert

Countywide medians only tell part of the story. What matters is how your specific home, street and school district are performing right now. Whether you’re weighing a first purchase, a move-up or a sale, Najwa Khoury can prepare a free, personalized market analysis using the latest local sales data and help you build a strategy that fits today’s rates.

Ready to talk? Contact Najwa Khoury today, or request our free Bay Area market report to keep up with the South Bay market month by month.

Sources

Last updated: October 26, 2026. Figures reflect the most recent published data at the time of writing; different sources measure medians differently. Payment examples are estimates for illustration only and are not financial advice.