The Bay Area real estate market is showing two different sides in August 2026. Single-family homes remain competitive, inventory is down nearly 12% year over year, and luxury home sales are gaining momentum. Meanwhile, townhomes and condos are offering buyers more opportunities to negotiate.
In this month's market update, Spencer Hsu examines mortgage rates, home prices, inventory, pending sales, and market conditions across six Bay Area counties. Whether you're buying your first home, upgrading to a larger property, or considering selling, understanding these trends can help you make a more informed decision.
In this update, you'll learn:
- Why rising mortgage rates remain an important factor for buyers.
- How Bay Area home prices are changing across different counties.
- What declining inventory means for competition.
- Why single-family homes, townhomes, and condos are behaving differently.
- Whether August could offer an opportunity before the fall market picks up.
1. Mortgage Rates Are Rising Again
Mortgage rates remain a major consideration for Bay Area homebuyers. According to the figures cited in Spencer's video, the average 30-year conventional mortgage rate reached 6.76% during the week preceding the update.
The video links this upward movement to rising 10-year Treasury yields, which influence long-term mortgage rates. Broader economic factors—including inflation concerns, government spending, geopolitical uncertainty, and investment in AI infrastructure—could also affect the direction of borrowing costs.
Spencer notes that mortgage rates have generally fluctuated within a broad range of approximately 6% to 7.5% over the past three and a half years. Although rates could approach 7% again, buyers and sellers have had time to adjust to this environment.
What this means for buyers: Rather than making a decision based entirely on the hope that mortgage rates will fall, buyers should evaluate their purchasing power, monthly payment, and long-term housing needs. A sustainable budget is more important than trying to predict the exact bottom of the rate cycle.
2. Bay Area Home Prices Show Mixed Results
The blended median price for single-family homes across Marin, San Francisco, San Mateo, Santa Clara, Contra Costa, and Alameda counties reached approximately $1.5 million in July 2026, up from $1.47 million a year earlier.
However, prices are moving differently depending on the property type.
- Single-family homes: Median price increased from approximately $1.47 million to $1.5 million.
- Townhomes: Median price declined from $1.05 million to $995,000.
- Condos: Median price rose from $714,000 to $730,000.
These figures highlight why buyers should look beyond the overall Bay Area median. Property type, location, and local demand can substantially change the conditions a buyer encounters.
Home Prices by Bay Area County
The July year-over-year median prices cited in the video show a relatively flat market in some counties and stronger growth in others.
County | July 2026 median | July 2025 median | Trend |
|---|---|---|---|
Santa Clara | $1.61M | $1.62M | Slightly lower |
San Mateo | $1.668M | $1.668M | Flat |
San Francisco | $1.5M | $1.4M | Higher |
Alameda | $1.072M | $1.067M | Slightly higher |
Contra Costa | $806K | $775K | Higher |
Marin | $1.5M | $1.4M | Higher |
Spencer points to San Francisco's AI-driven economy as one factor influencing demand in the region, including interest in Marin County. Meanwhile, Santa Clara and San Mateo counties were comparatively flat in the figures presented.
For buyers, this reinforces the importance of researching individual neighborhoods and comparing property types rather than assuming every Bay Area market is appreciating at the same pace.
3. Inventory Is Down Nearly 12% Year Over Year
One of the most important findings in the August update is the decline in available homes.
Across the six-county market, active listings fell from 8,903 in July 2025 to 7,853 in July 2026—a 11.8% year-over-year decrease.
That means buyers had considerably fewer active listings to choose from than they did a year earlier.
Interestingly, new listings increased during the same period. The market recorded 5,520 new listings in July 2026, compared with 5,210 in July 2025.
Some counties experienced notable increases in new listings. Santa Clara County rose from 1,349 to 1,557, while San Francisco increased from 384 to 411. Marin County moved in the opposite direction, declining from 224 to 198 new listings.
Even with more homes entering the market overall, the total number of active listings remained lower than the previous year.
What Does Lower Inventory Mean for Buyers?
More new listings do not automatically translate into more available choices. Homes can sell and leave the market quickly, keeping active inventory constrained.
For buyers pursuing single-family homes, fewer available properties can mean more competition for desirable listings. Being financially prepared, understanding local pricing, and acting decisively when the right property appears remain important.
For sellers, limited inventory may help well-priced homes attract attention, although results will depend on the property's location, condition, and competition.
4. Pending Sales and Closed Sales Reflect Different Trends
Pending listings provide insight into current buyer activity, while closed sales generally reflect transactions negotiated several weeks earlier.
In July 2026, pending listings totaled 3,378, down from 3,579 in July 2025. Closed sales were also slightly lower, with 3,579 transactions compared with 3,668 a year earlier.
Because closings typically follow accepted offers by approximately three to four weeks, closed-sale numbers may lag behind current market conditions.
The combination of fewer active listings and fewer pending sales suggests that buyers have fewer opportunities to choose from, even as the pace of transactions changes.
Months of Supply: Which Property Types Favor Buyers?
Months of supply estimates how long it would take to sell the available inventory at the prevailing sales pace. Spencer uses the following general guidelines:
- Under two months: Seller's market.
- Two to three months: More balanced market.
- Above three months: Buyer's market.
Here is how the three major property categories compared in July 2026.
Property type | July 2026 supply | July 2025 supply | General market condition |
|---|---|---|---|
Single-family homes | 1.8 months | 2.1 months | Competitive seller's market |
Townhomes | 2.7 months | 2.4 months | More balanced |
Condos | 3.2 months | 4.2 months | Buyer's market, improving |
Single-family homes continue to experience relatively tight supply. Townhomes have somewhat more inventory relative to sales, while condos have seen a notable improvement from their previous supply level.
This creates different opportunities depending on what you're buying. A buyer focused on a single-family home may need to prepare for multiple offers, while someone considering a condo or townhome may have more room to evaluate options and negotiate.
5. Single-Family Homes Remain Competitive, but Negotiations Vary
The pending ratio compares pending listings with active inventory and offers another way to gauge how quickly properties are being absorbed.
The July 2026 figures cited in the video were:
- Single-family homes: 50.8%.
- Townhomes: 37.6%.
- Condos: 29.5%.
Using Spencer's framework, a pending ratio above 50% indicates a very hot seller's market. Ratios between 30% and 50% suggest seller-favorable conditions, while 15% to 30% indicate a more balanced market.
These figures support the broader pattern: single-family homes remain highly competitive, townhomes still lean toward sellers, and condos are closer to balanced conditions.
Sale-to-List Price Ratios
The sale-to-list price ratio also shows how much buyers are paying relative to asking prices.
Property type | Sale-to-list ratio |
|---|---|
Single-family homes | 104.6% |
Townhomes | 99.5% |
Condos | 99.5% |
Single-family homes sold for an average of approximately 104.6% of asking price in the reported figures. Townhomes and condos sold at approximately 99.5% of asking price.
For buyers, this difference matters. A competitive single-family property may require an offer above asking price, while a townhome or condo could provide more room to negotiate, depending on its condition and demand.
In a less competitive situation, buyers may also have a better chance of retaining inspection contingencies, requesting seller credits, or negotiating other protections. These terms are never guaranteed, but the opportunity can improve when fewer buyers are competing for the same property.
6. Luxury Home Sales Are Gaining Momentum
Despite relatively modest changes in some median prices, total Bay Area residential sales volume increased.
The video reports approximately $6.455 billion in sales volume for July 2026, compared with $6.12 billion in July 2025—an increase of about 5%.
Luxury properties were a significant part of this growth. Homes selling for more than $4 million increased from 156 transactions in July 2025 to 218 in July 2026.
That represents a substantial year-over-year increase in high-end sales activity.
Spencer also notes that this activity is visible among his own clients. The figures suggest that demand at the upper end of the market is contributing to overall sales volume, even when price growth in some other segments is relatively limited.
For luxury buyers and sellers, the takeaway is to pay close attention to local comparable sales, property quality, and the specific price range in which a home competes. Broad market averages may not accurately reflect conditions for a $4 million-plus property.
7. Is August 2026 a Good Time to Buy a Home?
According to Spencer's outlook, the Bay Area market may cool somewhat during August as people take summer vacations. Activity could pick up again in the fall as buyers and sellers return to the market.
He views the period leading up to Labor Day as a potential window for buyers who are already prepared to make a move.
However, this does not mean every home will become more affordable or that prices will suddenly surge in September. Market performance will depend on the area, property type, available inventory, mortgage rates, and buyer demand.
If You're Buying a Single-Family Home
Expect competition to remain relatively strong. Focus on financing, realistic pricing, and a clear understanding of your must-haves. If the right home becomes available, being prepared can help you act confidently.
If You're Considering a Townhome or Condo
The current figures suggest more opportunities to compare properties and negotiate. Buyers may be able to explore inspection contingencies, seller credits, or other terms that are harder to secure in a highly competitive multiple-offer situation.
If You're Renting and Planning to Buy
This may be a useful time to assess your finances and begin exploring available properties. Rather than trying to predict short-term price movements, consider how long you plan to stay, whether the monthly payment fits your budget, and how a purchase supports your long-term goals.
Ultimately, buying a home should not depend on the expectation of immediate appreciation. It should make sense for your financial situation and housing needs.
Final Thoughts: Understand Your Local Market Before Making a Move
The August 2026 Bay Area real estate update reveals a market with different conditions across property types. Active inventory is down nearly 12% year over year, single-family homes remain competitive, and luxury sales have increased. Meanwhile, townhomes and condos may offer buyers more flexibility in negotiations.
Mortgage rates remain an important consideration, and the fall season could bring renewed activity. Still, there is no single answer to whether now is the right time to buy or sell.
The best strategy is to evaluate the specific county, neighborhood, and property type that match your goals.
Thinking about buying or selling in Silicon Valley or the greater Bay Area? Spencer Hsu and his team can help you review local market data, understand your options, and build a strategy around your timeline.
Schedule a discovery call to discuss your next move.
Frequently Asked Questions
1. Are Bay Area home prices increasing in August 2026?
The July 2026 figures in this update show the blended median price for single-family homes at approximately $1.5 million, up from $1.47 million a year earlier. However, price trends vary by county and property type, with some markets relatively flat.
2. Is Bay Area housing inventory going up or down?
Active inventory decreased from 8,903 listings in July 2025 to 7,853 in July 2026, a decline of approximately 11.8%. New listings increased year over year, but the total number of active homes remained lower.
3. Are condos and townhomes easier to negotiate on than single-family homes?
The reported figures suggest that buyers may have more negotiating opportunities with condos and townhomes. Their months of supply were higher than those for single-family homes, and their sale-to-list ratios were around 99.5%. Actual negotiating power depends on the property and its local competition.
4. What were mortgage rates in the August 2026 market update?
Spencer cited an average 30-year conventional mortgage rate of 6.76% for the preceding week, based on Mortgage News Daily. Rates can change frequently, so buyers should check current lender quotes before making financing decisions.
5. Should I buy a home before fall 2026?
August may offer an opportunity for buyers who are financially prepared, particularly in segments with more negotiating flexibility. However, buying should depend on your budget, housing needs, and long-term plans—not on trying to predict short-term price movements.