San Diego entered 2026 with structural undersupply intact, while local household formation was expected to outpace the broader region and state, supporting housing demand.
Near-term demand faced pressure from elevated mortgage rates, weak consumer confidence, and buyer hesitation, even as the underlying buyer pool remained present.
Attached housing kept transaction volume moving by offering a more attainable entry point than detached homes, helping sustain activity in a slower environment.
Builders responded with pricing adjustments and mortgage rate buydowns, while demand stayed more selective and price sensitive than in prior cycles locally.
San Diego’s demand outlook remains cautiously stabilizing, with near-term performance tied closely to consumer confidence as the market continues to rebound locally.
San Diego: Tight Supply Meets Uneven Demand
