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The spring rally has given way to a summer cooldown

The spring rally has given way to a summer cooldown
The Big Story
Quick Take:
  • Median home sale prices slipped for the second straight month in August, falling to $429,100 from June's peak of $442,800, though they remain slightly above where they were a year ago.
  • Inventory pushed higher again in August, reaching 1,620,000 homes for sale, the highest level we have seen in this cycle and nearly 6% above last year.
  • Existing home sales fell to 3,980,000, the softest reading in over a year, as mortgage rates climbed to 6.69% in August and 6.71% in September.
Note: You can find the charts & graphs for the Big Story at the end of the following section.
*National Association of REALTORS® data is released two months behind, so we estimate the most recent month's data when possible and appropriate.

The spring rally has given way to a summer cooldown
After five straight months of gains carried the median sale price to $442,800 in June, prices have now declined in each of the past two months. In August, the median home sold for $429,100, a 1.67% month-over-month decline from July's $436,400 and a 3.09% pullback from the June peak. The one bright spot is that prices are still running 1.59% above the $422,400 median we saw in August of last year, so the year-over-year comparison remains positive even as the seasonal momentum fades. The affordability story, however, has turned decisively less friendly. Mortgage rates jumped to 6.69% in August and edged up again to 6.71% in September, the highest readings in this entire data series and a full 71 basis points above the 6.00% low we saw back in March. The median monthly principal and interest payment now sits at $2,256, which is 2.50% higher than the $2,201 buyers were paying a year ago and more than $300 above the $1,949 January low. In other words, the affordability cushion that lower rates provided at the start of the year has now been completely erased. It is also worth noting that the Federal Reserve's mortgage-backed securities holdings have continued to run off, declining from roughly $2.05 trillion at the end of last year to about $1.91 trillion in September, which removes a meaningful source of demand for mortgage debt and helps explain why rates have been drifting higher even as the broader market cools.
Inventory keeps building, and that is the real story this month
Inventory did not plateau after all. After holding flat at 1,570,000 homes for three consecutive months from May through July, inventory jumped to 1,620,000 in August, a 3.18% month-over-month increase and a 5.88% gain over the 1,530,000 homes available at this time last year. That is the highest inventory level anywhere in this data series, and it represents a 31.7% increase from the December low of 1,230,000. What makes this build particularly notable is that it is not being driven by a flood of new supply. New listings actually fell to 401,760 in August, down 5.18% from July's 423,732 and essentially flat compared to the 402,276 new listings we saw in August of last year. So sellers are not listing more aggressively than they were a year ago. Instead, inventory is accumulating because homes are not clearing at the pace they once did. That distinction matters, because supply that builds from weak absorption tends to be stickier and puts more direct pressure on pricing than supply that builds from a surge of eager sellers.
Existing home sales have slipped below last year's pace
Existing home sales came in at 3,980,000 in August, a 1.97% month-over-month decline from July's 4,060,000 and a 1.24% drop from the 4,030,000 pace we saw in August of last year. This is the weakest sales figure in the data we have, and it marks a clear reversal from the spring, when sales were running above the prior year and reached 4,190,000 in May. The culprit is not hard to identify. Buyers who were enjoying sub-$2,000 monthly payments in January are now looking at $2,256, and mortgage rates that started the year at 6.16% are now sitting at 6.71%. When financing costs move that much in nine months, the marginal buyer simply steps out of the market, and that is exactly what the sales data is showing. Three consecutive months of declining sales, combined with inventory pushing to new highs, tells us that the balance of the market has shifted in a way it had not through the first half of the year. The question now is whether rates stabilize and let buyers re-engage this fall, or whether we continue to see demand erode into the winter.
Buyers are gaining leverage for the first time in a while
When determining whether a market is a buyers’ market or a sellers’ market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a seller’s market, whereas markets with more than three months of HSI is considered buyers’ markets.

At the national level, the numbers point clearly toward a buyers' market. With 1,620,000 homes for sale in August against an annualized sales pace of 3,980,000, the implied months of supply works out to roughly 4.9 months, comfortably above the three-month threshold that separates balanced markets from buyers' markets. A year ago, that same calculation produced about 4.6 months, so supply has loosened meaningfully over the past twelve months. Every component of the equation is currently moving in buyers' favor: inventory is at a cycle high and rising, sales are falling on both a monthly and annual basis, and median prices have declined for two straight months. The obvious catch is affordability. Buyers may have more negotiating room and more homes to choose from than at any point in recent memory, but with rates at 6.71% and monthly payments up more than $300 since January, the cost of taking advantage of that leverage has risen sharply. Sellers, for their part, should expect longer marketing times and more price sensitivity than they saw this spring. As always, real estate is a highly localized asset, which is why you should check out what's going on in your local market below in the Local Lowdown!

Big Story Data

The Local Lowdown
Quick Take:
  • Marin County dominated August, with the median single-family home selling for $1,778,000, a 15.83% jump over last August, while Sonoma, Solano, and Napa Counties all posted modest year-over-year declines.
  • Inventory has thinned dramatically, with 2,778 single-family homes for sale across the North Bay, down 29.62% year-over-year, and condo inventory off 23.30% to just 349 units.
  • Single-family homes are selling faster than a year ago in three of four counties, led by Marin at 21 days on market, a 27.59% improvement, while every county's condo segment slowed.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

Marin pulls away while the rest of the region cools
August produced a tale of two North Bays. Marin County had a standout month, with the median single-family home trading at $1,778,000, up 15.83% from $1,535,000 last August and up 1.6% from July. That is the strongest August reading Marin has posted in at least three years, and it caps a spring and summer stretch that peaked near $1,917,500 in April. Elsewhere, the picture softened. Sonoma County's median single-family price slipped to $793,000, down 4.46% year-over-year and down 4.92% from July's $834,000, marking its lowest monthly reading since late 2023 after a spring that held steady between $869,950 and $880,000. Solano County came in at $575,000, off 7.26% from last August and down 5.43% from July. Napa County actually improved month-over-month, rising 6.80% from July to $950,000, though that still represents a 3.06% decline compared to August 2025.

The condo market was similarly uneven. Marin condos edged up 0.81% year-over-year to $723,313, continuing a steady climb off the $524,000 low set in February. Sonoma condos rebounded to $454,998 from $422,500 in July but remain 5.86% below last August. Solano condos held near recent lows at $297,500, down 4.03% year-over-year, while Napa's small and notoriously volatile condo segment came in at $712,495, a 16.74% decline from last August.

Supply is disappearing faster than demand
The defining story of the North Bay this month is shrinking supply. Single-family inventory fell to 2,778 homes, a 12.3% drop from July's 3,167 and a striking 29.62% decline from the 3,947 homes available last August. Condo inventory told the same story, falling to 349 units from 429 in July and 455 a year ago, a 23.30% year-over-year contraction. For context, active single-family listings peaked above 4,100 in the summer of 2025 and have been running consistently below year-ago levels every month of 2026.

The pullback is coming from the supply side rather than from weakening demand. New single-family listings totaled 930 in August, down 17.84% from last August's 1,132, while new condo listings fell 26.92% to 95. Sales, meanwhile, are holding up well. Sellers closed 894 single-family homes in August, a 4.20% gain over last year, and condo sales rose 19.75% to 97 closings. With fewer homeowners choosing to list and buyers still transacting, the gap between supply and demand continues to narrow as the market moves into fall.

Marin buyers have less than a month to decide
Sales velocity improved across most of the region's single-family market. Marin County led with a median of 21 days on market, a 27.59% improvement over last August's 29 days and remarkably consistent with the 18 to 20 day readings of June and July. Solano County was close behind at 29 days, down 21.62% year-over-year and its fastest pace since spring. Sonoma County homes sold in 39 days, a 15.22% improvement over last August, though the trend has been drifting slower since April's 26 days. Napa County remained the region's slowest single-family market at 53 days, up 1.92% from last August and up from 43 days in July.

Condos moved in the opposite direction. Sonoma condos took 61 days to sell, up 48.78% from a year ago, while Solano condos needed 55 days, a 25% increase. Marin condos sold in 49 days, up 11.36% year-over-year, and Napa's condo median stretched to 100 days from 17 in July, a reminder of how thin monthly sample sizes can swing that segment. The overall message is clear: well-priced single-family homes are still moving briskly, but condo sellers need patience.
Sellers take control as supply tightens
When determining whether a market is a buyers' market or a sellers' market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a seller's market, whereas markets with more than three months of MSI are considered buyers' markets.

August brought a decisive tightening across the North Bay. Marin County's single-family market now sits at just 2 months of supply, down 54.55% from 4.4 months last August and the tightest reading in the past three years, placing it firmly in seller's territory. Solano County follows at 2.8 months, down 31.71% year-over-year and back below the balanced threshold after spending much of 2025 above it. Sonoma County is essentially balanced at 3.4 months, a 32% improvement from 5 months last August, and Napa County remains a buyers' market at 6.1 months, though that figure is down sharply from 9.1 months a year ago and represents its healthiest level since late 2024.

Condos are following the same trajectory with a lag. Marin condos tightened to 3.1 months from 5.3 last August, a 41.51% improvement that puts the segment essentially in balance. Sonoma condos sit at 3.7 months, down 33.93%, while Solano condos improved to 4.2 months from 5.8 and Napa condos eased to 6.6 months from 8.7. Taken together, the region has shifted meaningfully toward sellers over the past twelve months, and with new listings running well below last year's pace, that leverage looks likely to carry into the fall.

Local Lowdown Data

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Stay up to date on the latest real estate trends.

Buyers are gaining leverage for the first time in a while
The spring rally has given way to a summer cooldown
Inventory keeps building, and that is the real story this month
Existing home sales eased from June's pace but held slightly above last July, keeping demand roughly flat year over year.
Inventory declined in July, slipping below year-ago levels for the first time in months, and new listings fell sharply from June.
Median home sale prices pulled back from June's twelve-month high, but at $434,100 they remain nearly 2% above where they stood a year ago.
Existing home sales posted their strongest year-over-year gain in quite some time, signaling that buyers are finally coming off the sidelines.
Inventory levels have climbed back to where they were at this time last year, giving buyers more options heading into the summer...
Median home sale prices surged past last year's levels in May...
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