December '25 Market Update

December Market Update: Quick Look at the National & Local Trends

If the market feels a little confusing lately — you’re not alone. Between shifting interest rates, delayed economic data, and wildly different conditions from one Bay Area neighborhood to the next, this is a moment where context matters more than headlines. Here’s a clear breakdown of what we’re seeing, both nationally and right here at home.

National Snapshot: Rates, Inventory, and Economic Uncertainty

While interest rates have declined modestly, they remain well above inflation, and mortgage rates have yet to fall below the 6% mark. In December, the Federal Reserve issued its third consecutive cut to the federal funds rate, a welcome move for buyers and sellers alike. However, the path forward remains uncertain.

Market expectations for additional cuts are mixed. Current projections show only about a 25% chance of another rate cut in January, largely due to delayed and incomplete economic data stemming from the recent government shutdown. Because the Fed relies heavily on this data to guide decisions, uncertainty continues to shape both lender behavior and broader market sentiment.

On the housing supply side, inventory has remained remarkably steady at the national level, hovering near 1.5 million homes throughout most of the year. In October, inventory reached approximately 1.52 million homes, representing a 10.95% increase year over year. New listings also increased, with more than 384,000 homes hitting the market, up 5.08% from last year. Despite these shifts, home prices continue to rise modestly, with the median U.S. home price up 2.06%, now sitting at $415,200.

The Bay Area Reality: One Region, Many Markets

While national trends provide useful context, real estate is — and always will be — highly local. November revealed striking differences across Bay Area submarkets as seasonal inventory contraction met uneven buyer demand.

San Francisco: A Market on Fire

San Francisco continues to defy seasonal expectations. Single-family home prices surged 15.82% year over year, while condos rose 9.36%. Homes are now selling for an average of 16% above asking price, the highest premium seen in three years.

This surge is being driven by a dramatic lack of inventory. Active listings dropped to just 553 homes, the lowest level in three years. Single-family inventory fell 44.84% year over year, with condo inventory down 41.90%. With just 0.8 months of supply, San Francisco is firmly in an extreme seller’s market.

Speed tells the same story. Single-family homes are selling in an average of 13 days, while condos are moving in 35 days, giving buyers very little time to act.

Silicon Valley: Cooling After a Strong Run

After more than a year of steady appreciation, Silicon Valley experienced its first across-the-board single-family price declines. San Mateo County led the pullback with prices down 5.06%, followed by Santa Cruz at -1.18% and Santa Clara at -0.16%.

Condo prices softened in San Mateo and Santa Clara, though Santa Cruz stood out with a 5.17% increase. Inventory dropped sharply — nearly 30% month over month — pushing many Silicon Valley submarkets back toward seller territory despite softer pricing.

Market speed remains fast in San Mateo and Santa Clara, with homes selling in two weeks or less, while Santa Cruz saw a notable slowdown, with days on market more than doubling compared to last year.

East Bay: Stability with Pockets of Softness

The East Bay delivered a more mixed performance. Alameda County experienced notable softness, with single-family home prices down 7.45% year over year, while Contra Costa County managed a modest 1.36% gain. Condo prices declined across both counties.

Unlike most of the Bay Area, East Bay inventory remained relatively flat year over year, offering more breathing room for buyers. Single-family homes are still firmly in seller’s market territory, but condos continue to favor buyers — a dynamic that presents unique opportunities depending on property type.

North Bay: Volatility and Seasonal Shifts

The North Bay showed more muted price movement overall, though not without volatility. Marin County experienced a 10.03% decline in single-family prices, while Sonoma and Napa remained relatively stable.

Condo pricing swung dramatically, with Napa surging 65.35% and Solano dropping 32.46%. Inventory fell sharply across the region, now sitting below December of last year, signaling continued tightening through the winter months.

Most North Bay submarkets are moving toward seller or balanced conditions, consistent with typical seasonal patterns — though the pace of contraction suggests tighter conditions than usual.

What This Means for Buyers and Sellers

The Bay Area has officially entered a period of extreme supply constraint, and this trend is likely to intensify through the holiday season. For sellers, limited inventory can create powerful leverage — especially in markets like San Francisco and parts of Silicon Valley. For buyers, success hinges on preparation, strategy, and local insight.

This is not a one-size-fits-all market. The right move depends on where, what, and how you plan to buy or sell.

The Milestone Perspective

At Milestone Realty, we believe real estate decisions should be guided by data, clarity, and local expertise — not noise. Markets shift, but thoughtful strategy always wins.

If you’re curious what these trends mean for your neighborhood, your home’s value, or your next move, we’re here to help you navigate it with confidence. More than just numbers — it’s about timing, trust, and making smart moves together.
Huzzah to staying informed and moving forward with intention.