Mortgage rates climbed 7 weeks in a row this fall, past 7%, yet San Francisco buyers went into contract in September at the same pace as this spring. That almost never happens here. Prices hit a record in 2026, every neighborhood with enough sales to compare rose, and sales above $5M nearly doubled. The one place we’re starting to see a little give is imperfect homes under $4M.
Not yet. In September, buyers went into contract on about 58% of the homes for sale, the same pace as this spring, while the 30-year rate climbed from 6.71% to 7.03%. By October 8, it hit 7.40%, the highest since late 2023.
This summer, I told you the fall market would likely feel a lot like spring. Since then, rates have gone up 7 weeks in a row. You’d expect that to cool things down. It didn’t.
The best read on demand is what’s called absorption: contracts as a share of homes for sale, counted when deals are ratified, not 30 to 60 days later when they close. This spring it ran 59% in March, 58% in April and 55% in May. This September it was about 58%.
Contracts jump every September, but they normally fall well short of spring. From 2019 through 2024, September ran 10 to 36 points below spring every year. Last year, fall beat spring for the first time in our data. This year, fall kept that pace.
It’s also the fastest September in our data, which goes back to 2019. Last September was 43%.
And it isn’t a one-month story. Absorption has beaten the year before in every month of 2026. August was 54%, versus 32% a year earlier, and August felt VERY hot.
They did it more often than this spring, too. For deals ratified in September that have closed so far:
Buyers are pushing back a little, and only in one corner of the market. Compared with this spring’s monthly pace, September contracts on houses under $4M were down, while houses at $4M and up were up.
On the ground, we felt some softness on imperfect homes under $4M. Not a lot, but there were some sporadic opportunities that weren’t there in the spring. It could be a small blip in an otherwise strong market. Homes that sit don’t show up in closed-sale numbers right away, so the data may take a while to catch up. And 153 September contracts still haven’t closed, so these numbers will move.
closed, so these numbers will move.
Inventory is low because homes sell almost as fast as they’re listed. Homes for sale are down 28% from a year ago, but that’s not because sellers are holding back. 708 new listings came on in September, essentially the same as last year’s 718.
The homes just don’t last. Houses averaged 22 days on market, down from 28 a year ago. Only 68 listings cut their price in September, versus 152 a year ago. That’s 3.7% of listings, the lowest September share in data going back to 2016
Buyers are taking homes off the market about as fast as sellers put them on.
Yes. The median house sold for $2,200,000 in the second quarter of 2026, the highest quarter in our data back to 2012. The third quarter came in at $2,152,500, up 24.8% from $1,725,000 a year earlier and the highest third quarter in our data.
Both are well above the last peak, $1,955,000 in the second quarter of 2021. After that, prices fell to $1,525,000 in early 2023 before this climb began
Part of that jump is which homes sold, not just what they sold for. As I wrote in August, a median can move because of the mix. Luxury homes made up about 1 in 10 sales this September, versus about 1 in 22 last September. Price per square foot, which is less thrown off by the mix, rose about 18% for houses over the same 3 months. Still a very big number. Just not 25%.
September’s closings are mostly deals ratified in August, when rates were around 6.7%. 94.2% of houses sold over their final list price, up from 83.6% a year ago. Condos are catching up: 69.5% sold over list, up from 41.1%, and the median condo was $1.27 million, up 16% (a 3-month average of monthly medians, condominiums only).
Every one of the 24 neighborhoods with enough house sales to compare rose this year, and 5 of them rose more than 30%. Citywide, the average house sold for $1,267 per square foot from January to September, up 19.9% from $1,056 a year earlier.
The 5 fastest were Inner Mission, from $845 to $1,173 per square foot (+39%); Potrero Hill, from $1,107 to $1,505 (+36%); Noe Valley, from $1,327 to $1,775 (+34%); Eureka Valley/Dolores Heights, from $1,292 to $1,705 (+32%); and Inner Sunset, from $1,084 to $1,421 (+31%).
The slowest were Portola, from $883 to $952 (+8%); Outer Mission, from $791 to $852 (+8%); Visitacion Valley, from $766 to $797 (+4%); and Mission Terrace, from $886 to $904 (+2%). The typical neighborhood rose about 15%.
One caution: each neighborhood here has 15 to 101 house sales, so a few unusual homes can move its number. Treat any single neighborhood as a range, not a precise figure.
| San Francisco neighborhood (houses) | Jan to Sep 2025 (avg $ per sq ft) | Jan to Sep 2026 (avg $ per sq ft) | Change, 2025 to 2026 |
|---|---|---|---|
| Inner Mission | $845 | $1,173 | +39% |
| Potrero Hill | $1,107 | $1,505 | +36% |
| Noe Valley | $1,327 | $1,775 | +34% |
| Eureka Valley/Dolores Heights | $1,292 | $1,705 | +32% |
| Inner Sunset | $1,084 | $1,421 | +31% |
| Portola | $883 | $952 | +8% |
| Outer Mission | $791 | $852 | +8% |
| Visitacion Valley | $766 | $797 | +4% |
| Mission Terrace | $886 | $904 | +2% |
| Citywide, all neighborhoods | $1,056 | $1,267 | +19.9% |
Downtown condos are rising as fast as the rest of the city. The median 2-bedroom condo in Downtown/SoMa rose from about $1,215,000 to $1,365,000 over the past year (+12.3%). Elsewhere in San Francisco, it rose from about $1,230,000 to $1,379,000 (+12.1%).
The gap between the two stayed about $14,000, and downtown briefly came out ahead in May and July. These are 12-month averages, so they move slowly, but there’s no sign here of downtown condos falling behind.
The San Francisco luxury market has nearly doubled. Luxury sales (houses at $5M+ and condos and co-ops at $3M+) totaled 241 from January to September, versus 121 a year earlier. In September alone, 19 houses closed above $5 million, up from 4 a year ago.
Counting every home type at $5M and up, sales went from 72 to 142 over the same months. Pacific Heights, the Marina and Presidio Heights (District 7) led, from 37 to 66. Noe Valley, the Castro and Cole Valley (District 5) grew fastest among the busier districts, from 10 to 26. Russian, Nob and Telegraph Hill (District 8) went from 8 to 17, and the Richmond, Sea Cliff and Lake Street (District 1) from 6 to 13.
We’re seeing this firsthand. We’re working with significantly more buyers above $7M than in years past. And they are acting differently, too. They’re moving faster than we’ve ever seen, and facing more competition than before this year. One of my buyers recently prepared a $9.5M offer in Noe Valley, on a street where homes usually take time to sell. Only 2 buyers had seen the home, and the other one offered over asking. The comps put that price at the very top of the range, if not beyond it. Both buyers wanted it anyway. Mine decided not to go as high as it would have taken to win.
Tech money still looks like a big driver, though the data can’t prove it. In August, OpenAI completed a roughly $7 billion employee share sale. Anthropic said in June that it had confidentially filed to go public. It hasn’t set a date, but the latest reports say as soon as mid to late November, though that timing has already moved once.
I can’t tell you how much of that money reached September’s sales. What the data does show is buyers competing harder for fewer homes.
Plan for higher rates and know your ceiling before offer day. On a $2.5 million home with 20% down, the move from 6.7% to 7.4% adds about $940 a month in principal and interest. Put that into your numbers before offer day, not after.
My advice is to get preapproved for the maximum amount you can, so during negotiations you know whether you have the ability to go higher. Trust me, you’ll be happy you did this in advance.
It makes me cringe a little to say this, but if you have assets you can borrow against to buy in cash, it’s worth exploring. If you have questions about how that works, reach out.
If you’re shopping under $4M, the opportunities I mentioned are worth a look now. We’re not seeing them at higher price points.
Start planning for spring if you haven’t already. Your competition is thin: about 1.2 months of supply for houses and 2.1 for condos. Buyers are paying well over asking for homes that are priced right.
The window is short, though. Last year, contracts fell from 438 in October to 178 in December. If we’re not already talking, you’ve likely missed this fall. But we’re already signing listings for next year, so let’s talk. The best time to start is months before you plan to move. With the expected IPOs getting closer, we’re anticipating a strong spring, wherever rates land.
September’s contracts were signed with rates around 7%. 7.4% is a new test. The Fed raised its benchmark rate on September 16, its first increase since July 2023, and mortgage rates have kept climbing since.
And for the first time in years, buyers are bringing up rates with us. Every 1% rise costs a buyer about 10% of their buying power. We’re seeing the bottom half of the market feel it most.
San Francisco buyers have shrugged off higher rates so far. That doesn’t mean they always will. But when it comes to homes over $6M, from what I’m seeing on the ground, the appetite will continue to be strong well into 2027.
A slow October. If October’s absorption comes in clearly below spring’s 55% to 59%, rates are finally biting. If it holds near spring, San Francisco demand is still outrunning rates. I’ll also be watching whether the softness under $4M shows up in the numbers or fades. I’ll report back either way.
If you’re weighing a move, I’d love to help you think it through.
September figures are provisional and will change as late sales and fall-throughs are reported.
Sources: SFAR MLS (refreshed October 12, 2026), Realtor.com Research and Freddie Mac. Data deemed reliable but not guaranteed; all numbers approximate.
