San Diego Housing Market Update August 2025:

Headlines vs. Reality: A Market in Transition

Lately, headlines across the country have been filled with warnings about rising housing inventory and slowing sales, painting a grim picture of the real estate market. But here in San Diego County, the story isn’t nearly as bleak. While prices have pulled back very slightly from record highs and homes are taking a bit longer to sell, the data shows a market that’s adjusting—not collapsing. Inventory is climbing, giving buyers some long-awaited breathing room, yet levels remain well below historic averages. For sellers and real estate investors, thoughtful pricing and strong presentation are more important than ever, while buyers are finally finding opportunities that were scarce during the frenzy of recent years. In short, San Diego’s housing market is in transition—balanced, competitive, and moving toward a healthier long-term footing. In the article below we will take a look at some of the major metrics in San Diego County that we track closely here at Lantzman Lending.

Long-Term Price Growth and Market Resilience

Over the past decade, San Diego County’s MEDIAN HOME PRICE has followed a steady upward trajectory, with only brief pauses during moments of broader market uncertainty. In 2015, the median hovered in the mid-$400,000s, but by 2020 it had climbed past $600,000. Since then, the market has seen accelerated gains, pushing prices near the $900,000 mark in 2025. While there have been seasonal and economic dips along the way—often coinciding with rising interest rates or shifts in buyer sentiment—each pullback has been relatively short-lived, with prices rebounding to set new highs. This long-term resilience highlights the region’s strong demand drivers, from limited land availability to the area’s enduring appeal for both local and out-of-state buyers.

Graphs courtesy of SDAR

Looking at just the past three years, the picture shows more of the market’s short-term ebb and flow. After peaking in mid-2022, prices eased as higher borrowing costs cooled activity, dropping into the mid-$800,000s. However, the dip proved temporary, with values climbing again in 2024 and stabilizing at $895,000 by July 2025. The pattern suggests that while buyers are more rate-sensitive than they were during the pandemic boom, underlying demand remains strong enough to prevent significant or prolonged price declines. For investors and homeowners alike, this stability—despite headwinds—signals a market that is adjusting rather than contracting.

Months of Inventory: A Step Toward Balance

Over the past decade, INVENTORY IN SAN DIEGO COUNTY has seen a dramatic transformation. From 2015 through 2019, active listings consistently floated between 12,000 and 15,000 homes, giving buyers plenty of choice and keeping the market relatively balanced. But once the pandemic hit, inventory plummeted to historic lows, dipping under 3,000 homes at one point in 2021–2022. That extreme shortage fueled rapid price appreciation and bidding wars. Fast forward to today: as of July 2025, active listings have climbed back to just over 7,100. While that’s nearly double the levels seen in the frenzy of 2021, it’s still well below the long-term averages. This rebound gives buyers more breathing room, but the market is far from oversaturated.

Looking at MONTHS OF INVENTORY — the metric that measures how long it would take to sell through current listings at the existing sales pace—we see a similar story. A balanced housing market typically runs around 4 to 6 months of supply. San Diego hasn’t seen that kind of balance in years. During the pandemic, supply bottomed out at barely 1 month, creating a very heavy seller’s market. Now, with inventory building, months of supply has risen to 3.6 as of mid 2025. That shift signals a healthier, more sustainable environment where buyers can negotiate and sellers must be more strategic, but it still leans toward the seller’s side compared to historic norms. In short, San Diego’s market is normalizing bringing it closer to long-term health after years of extremes. Typically we see inventory contract coming into the winter months, and lower mortgage rates are on the horizon. However, these lower interest rates have been on the horizon for quite some time and they keep getting pushed further down the road due to uncertainty and persistent inflation.

Sales Activity: The Market’s Weak Spot

SALES ACTIVITY has been one of the weaker points of the market in recent years. Looking back over the past decade, San Diego consistently saw 3,000 to 4,000 homes sold in peak months. But since 2022, those numbers have trended lower, with sales dipping into the low 2,000s by mid-2025. As of July 2025, there were 2,131 homes sold—well below the long-term average. This subdued pace was partly due very low inventory and partly due to affordability challenges, with higher home prices and increasing interest rates slowing down buyer demand.

What’s important to note, however, is how this trend interacts with rising inventory. Active listings have been building steadily, yet sales haven’t picked up in tandem, at least not yet. If that disconnect continues, it could lead to more supply sitting on the market, which in turn places downward pressure on prices. For now, prices remain stable, but this dynamic is a key factor we’re watching closely. A balanced market depends not just on inventory levels, but also on how quickly that inventory is absorbed by buyers. If sales volumes don’t begin to increase in the coming months or inventory does not shrink, San Diego could see a more noticeable shift in pricing power from sellers to buyers.

Local vs. National: Two Very Different Stories

When we zoom out and COMPARE SAN DIEGO TO THE NATIONAL HOUSING MARKET, the differences are striking. Nationally, inventory has surged, with over 1.1 million active listings as of July 2025—the highest levels since 2020. That has pushed the U.S. months of supply of new homes to nearly 10 months, a level not seen since the Great Recession. By contrast, San Diego’s inventory, while climbing, sits at just over 7,100 active listings with 3.6 months of supply. In other words, what looks like a flood of homes nationally is still only a gradual return toward balance locally. San Diego’s extreme land constraints, steady demand, and lack of large-scale new construction have kept the market tighter than much of the country.

Graphs courtesy of FRED (st louis federal reserve)

The pricing story underscores that difference. Nationally, the median home price has actually retreated in recent quarters, falling back to around $410,800 after peaking near $440,000 in 2022. Meanwhile, San Diego’s median price remains near record highs at $895,000, more than double the U.S. figure. This resilience shows how San Diego’s fundamentals differ from national trends: while the country as a whole is wrestling with oversupply in some regions and affordability challenges, San Diego remains defined by scarcity and sustained demand. That gap between local and national conditions is critical for investors and homeowners to understand—the headlines may focus on a “softening” U.S. housing market, but San Diego continues to chart its own course.

What This Means for Investors

In today’s market, the key for investors isn’t just watching headlines—it’s understanding how local conditions stack up against the national backdrop. While national stories may emphasize rising inventory and slowing sales, San Diego’s market is showing a very different dynamic: constrained supply, resilient pricing, and cautious but steady demand. For investors, that means opportunity lies in carefully tracking both the broader economic climate and the nuances of the local market. Whether you’re eyeing a fix-and-flip, building a rental portfolio, or repositioning an existing asset, having a clear read on these trends is essential to timing your moves wisely.

At Lantzman Lending, we know that no two deals are alike—and no two markets move in lockstep. That’s why we encourage investors to stay proactive, stay informed, and lean on experienced lending partners who understand both the national narrative and the San Diego reality. If you’re considering your next investment or want to talk strategy in light of the current market conditions, give us a call or send us an email. Our team is here to help you analyze the numbers, structure the right financing, and move quickly when opportunity knocks.

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