SV Market Report

• Freddie Mac's 30-year fixed rate averaged 7.28% on October 1.
• August existing-home sales fell 2.0% to a 3.98 million annual pace.
• Inventory rose to 1.62 million homes and 4.9 months of supply, up from 4.6 months in July and a year earlier.
• The national median rose 1.6% year over year to $429,100, while affordability improved from a year earlier.
• August payrolls rose 162,000 and unemployment held at 4.1%.

Data cutoff: October 1, 2026. National housing, inflation and employment data represent August; mortgage data are current through October 1. The Federal Reserve decision was published September 16. Measured data and Alford-Bon interpretation are identified separately throughout.

Freddie Mac's 30-year fixed mortgage averaged 7.28% on October 1, up from 7.03% a week earlier, 6.71% four weeks earlier and 6.34% a year ago. The Federal Reserve also raised its policy-rate target by one-quarter point, to 3.75%–4.00%, on September 16. Mortgage rates do not move one-for-one with the federal funds rate, but both reflect a financing environment in which inflation and bond-market expectations matter again.

For buyers, this makes loan structure central to the offer strategy. Adjustable-rate mortgages can be a practical tool for buyers with a defined holding period, anticipated income growth or plans to refinance if fixed rates improve. The comparison should include the ARM's initial term, adjustment index, margin and lifetime caps alongside a fixed-rate quote and any seller-funded buydown.

August existing-home sales declined 2.0% from July to a 3.98 million seasonally adjusted annual pace and were 1.2% below August 2025. Inventory, however, rose 3.2% during the month to 1.62 million homes—5.9% above a year earlier—and reached 4.9 months of supply, up from 4.6 months in July and a year earlier.

That is a meaningful shift for the national market: buyers have more alternatives and more time to compare them, even though supply still varies dramatically by region and property type. Pending sales increased 0.3% in August but remained 4.7% below a year earlier, suggesting that higher rates are limiting the number of buyers who can convert interest into a contract.

The national median existing-home price rose 1.6% year over year to $429,100, while NAR's affordability index improved to 104.7 from 101.2 a year earlier. First-time buyers represented 30% of purchases, up from 28% a year ago, and cash buyers represented 27%. Wage growth and a slower pace of price appreciation helped, but the late-September rate increase raised the payment on new purchases.

On a 30-year fixed loan, monthly principal and interest on $1 million is about $6,459 at 6.71%, $6,673 at 7.03% and $6,842 at 7.28%—roughly $169 more per month than at 7.03%—before taxes, insurance or association dues. On Silicon Valley loan balances, small rate changes materially alter purchasing power, so the best comparison is the total monthly and five-year cost—not simply the headline rate.

New single-family home sales increased 6.4% in August to a 684,000 annual pace, with 8.5 months of supply. The median new-home price was $393,700, 5.8% below a year earlier. Existing homes, by contrast, had 4.9 months of supply and a $429,100 median. Those medians are not directly comparable because geography, lot size and product mix differ, but the contrast shows where builders have used inventory, pricing and incentives to keep buyers engaged.

In Silicon Valley, new-home supply is limited and often townhomes and condos or at the region's edges, so the lesson is strategic rather than literal: compare builder incentives, resale condition, association costs and commute tradeoffs on an equal monthly-cost basis. A lower advertised price or rate is only one piece of the decision.

• California single-family sales rose 2.4% from July and 1.4% from August 2025.
• The statewide median returned above $900,000, while inventory rose to 3.7 months.
• August single-family supply remained tight at an estimated 1.7 months in Santa Clara and 1.3 months in San Mateo.
• Santa Clara townhomes and condos offered more choice: 3.2 months of estimated supply and a 26-day median market time.
• San Jose metro payrolls grew 1.6% year over year, but information, professional/business and financial employment declined.

August is the newest complete local housing period available for this October 6 issue. MLSListings county figures cover existing single-family homes unless noted; California figures are from C.A.R. and represent existing single-family homes. Estimated months of supply is Aculist/MLSListings month-end inventory (data as of September 8) divided by August closed sales.

California existing single-family sales rose 2.4% from July to a 269,620 annual pace and were 1.4% above August 2025. The statewide median increased 1.6% from July to $901,420 and was essentially flat year over year at +0.1%. The sale-to-list ratio improved to 98.9% from 98.3% a year earlier, and median market time shortened to 28 days from 31.

Supply nevertheless rose to 3.7 months—its highest level in six months, though below 3.9 months a year earlier—even as active listings declined 1.6% from July and 6.2% from a year earlier. That combination points to a market with continuing demand but greater payment sensitivity—not a broad retreat by sellers or buyers.

MLSListings placed August's single-family median at $2.075 million in San Mateo County, up 9.2% year over year, and $1.85 million in Santa Clara County, down 1.7%. Santa Cruz County's $1.35 million median was down 3.2%. Median market time was still fast—12 days in San Mateo and Santa Clara and 14 days in Santa Cruz—but estimated supply ranged from 1.3 months in San Mateo to 4.2 months in Santa Cruz. Single-family inventory was up about 19% from a year earlier in Santa Clara and down about 13% in San Mateo.

The practical conclusion is that pricing must begin with the correct micro-market. A polished home with strong presentation and a list price supported by the closest current competition can draw urgency, while a similarly priced home in a different neighborhood, school boundary, condition or property category can face a very different response.

Santa Clara County's townhome-and-condo market carried an estimated 3.2 months of supply in August, versus 1.7 months for single-family homes. Condos and townhomes sold in a median of 26 days, compared with 12 days for single-family homes, and their median price was $846,944. That gap is one of the clearest sources of buyer choice in the current local market.

For buyers, the opportunity is strongest where association finances, insurance and condition have already been investigated. For sellers of townhomes and condos, complete disclosures, well-documented reserves and a price positioned against active competition matter as much as staging. The single-family-home market remains tighter, but buyers still distinguish sharply between turnkey and compromise properties.

San Jose-Sunnyvale-Santa Clara nonfarm employment was 1.6% above a year earlier in August. Construction grew 7.8%, education and health services 6.2%, leisure and hospitality 2.1% and manufacturing 1.4%. Information employment declined 0.5%, professional and business services declined 0.3%, and financial activities declined 2.7%.

That mix helps explain why housing demand feels durable but selective. Overall employment growth supports the market, while households tied to slower white-collar sectors may be more deliberate about timing, liquidity and monthly payments. Sellers should expect buyers to scrutinize value; buyers should expect strong competition when several well-qualified households converge on the same scarce home.

For buyers: arrive fully underwritten, compare fixed-rate and adjustable-rate options, and ask the lender to model the initial payment, first adjustment and maximum payment before writing. A later refinance can improve the outcome, while an ARM can make the initial purchase more efficient when its terms match the buyer's time horizon and financial plan.

For sellers: prepare the home and disclosures before launch, then price against the closest recent sales and active competition within the same micro-market. A polished home can still create a competitive environment, but the market is quicker to identify aspirational pricing when buyers have alternatives.

For both sides, October favors decisions built around the actual property and household—not a prediction that every rate, price or neighborhood will move together.