What December Data Reveals About the 2026 Housing Market
If you’re building a real estate strategy for 2026, you’re asking the right questions. Interest rates have hovered around 6% for more than three years, affordability remains tight, and yet people are still buying, selling, and upgrading across the Bay Area.
Using the latest December 2025 data, this January 2026 update breaks down what’s really happening in the market, why seasonal trends still matter, and how buyers and sellers are positioning themselves heading into spring.
A Normal Seasonal Slowdown, Not a Market Breakdown
December traditionally marks a seasonal dip in the Bay Area housing market, and 2025 was no exception.
In Santa Clara County, median prices softened from their summer highs, following the same pattern seen in prior years. For example:
-
January 2025 median price: ~$1.84M
-
Summer peak (June): ~$2.13M
-
December 2025 median: ~$1.50M
That roughly 12% swing may sound dramatic, but it’s consistent with historical seasonality. Similar declines occurred from fall to winter in both 2024 and earlier years. This is not a sudden correction—it’s how the Bay Area market typically behaves.
Inventory Remains the Core Constraint
While prices get most of the attention, inventory continues to be the real story.
December 2025 actually saw more new listings than December 2024 (573 vs. 456), but inventory is still far below spring and summer levels. Compared to peak months, December has two to three times fewer homes available.
This creates a familiar frustration:
Even well-qualified buyers with strong finances often struggle to find homes they’re excited about.
Low selection—not lack of demand—is what slows the market at year-end.
Sales Volume Is Softer, But Context Matters
Closed sales numbers always lag listings because most transactions involve financing. Offers written in December typically close in January.
That said, December 2025 recorded 734 closed sales, lower than previous years. November was also softer than normal. Is this concerning? Not yet.
There simply isn’t enough data to confirm a trend. The next few months—January through March—will determine whether this is a temporary pause or something more structural.
Median Home Prices Across the Bay Area
Here’s how prices compare by county as of December 2025:
-
Santa Clara County: ~$1.50M
-
San Mateo County: ~$1.51M
-
San Francisco: ~$1.38M
-
Alameda County: ~$960K
-
Contra Costa County: ~$754K
For buyers with flexible commutes, the affordability gap is significant. Alameda and Contra Costa Counties offer entry points that are $500K–$750K less than core Silicon Valley markets.
How Buyers Are Adjusting in 2026
After more than three years of steady interest rates, buyers have largely accepted that meaningful rate relief may not arrive soon. Instead of waiting, they’re adapting.
Common strategies include:
-
Starting with condos or townhomes
-
Trading up using built-up equity
-
Leveraging strong stock market performance
-
Using family gifts or inheritance to offset higher borrowing costs
Many move-up buyers are selling smaller properties—even in a “not-hot” market—to roll equity into their next home.
Wealth Is Offsetting Higher Rates
Despite affordability challenges, buyer confidence is being supported by wealth growth outside of housing:
-
Home equity from purchases made pre-2020
-
Stock market gains and RSUs
-
Tech liquidity events and capital raises
-
Intergenerational wealth transfers
With rates unchanged for over three years, people are no longer waiting for perfect conditions. The mindset has shifted to:
“If rates improve later, we’ll refinance. If not, we move forward now.”
Why More Inventory May Be Coming
One important factor likely to increase supply in 2026 is capital gains timing.
Many homeowners who bought in 2019 or earlier are nearing the end of the 2-out-of-5-year primary residence capital gains exclusion window. That forces a decision:
-
Sell and capture up to $500,000 in tax-free gains
-
Convert the home to a rental
-
Hold and accept future tax exposure
As these deadlines approach, more entry-level condos and townhomes are expected to hit the market—good news for first-time buyers.
Sellers Face a Strategic Choice
For sellers, 2026 is about trade-offs:
-
Hold and rent (with management and tenant risk)
-
Sell now and access liquidity
-
Wait and bet on future appreciation
Even if prices aren’t spectacular, many owners still have meaningful equity. For some, access to cash, reducing leverage, or simplifying finances outweighs waiting for a stronger market.
These are increasingly math-driven decisions, not emotional ones.
What to Expect Heading Into Spring 2026
Looking ahead:
-
Condos and townhomes: Likely flat or slightly down
-
Single-family homes ($2M–$3M+): Still competitive
-
Move-up buyers: Driving demand in prime locations
-
Inventory: Gradually improving, not flooding
The market isn’t poised to explode—but increased movement is generally healthier than stagnation.
Final Thoughts: 2026 Is a Planning Year
Right now, the most active participants in the Bay Area market aren’t rushing—they’re planning.
They’re:
-
Running numbers
-
Setting timelines
-
Preparing homes for sale
-
Lining up financing, equity, and liquidity
Spring is only a few months away, and those who prepare early tend to have the most flexibility when competition returns.
If you’re considering buying, selling, or upgrading in 2026, the key isn’t timing the market perfectly—it’s having a clear, realistic game plan tailored to your situation.
If you’d like help mapping that out, now is the time to start the conversation.