July '25 Market Update

• Although affordability has been improving over the past few months, monthly P&I payments are still quite a bit higher than they were last year.
• Despite political moves that some believe were designed to bring down interest rates, mortgage rates remain high, as the lending market prices in future uncertainty.
• On a national level, inventories are increasing at a very rapid rate, while the number of homes sold has declined.
• Over the past couple of months, the macroeconomic environment has been incredibly unpredictable, a trend which looks like it will continue over the coming months.

Even as inflation appears to be under control, housing-related costs continue to rise. The median monthly principal and interest (P&I) payment is now $2,113, a 3.94% increase year-over-year—outpacing broader inflation, which remains in the 2–3% range. This indicates that inflationary pressures are still present in the housing sector, driven by both local supply constraints and ongoing buyer demand in many markets.

Mortgage rates are holding steady in the mid to high-6% range, with no major drops in sight unless the economy weakens significantly. Despite some speculation, the Federal Reserve has remained cautious. Most Fed officials forecast the federal funds rate to drop slightly, reaching around 3.75–4.00% by year-end, and 3.25–3.50% by 2026.

On a national level, housing inventory is growing, with a 20.83% increase year-over-year, now totaling 1.45 million homes. Meanwhile, existing home sales dropped 3.38% to 4 million. Interestingly, home prices are still climbing, with a median sale price of $414,000, up 1.82% year-over-year. And the number of new listings is rising too—up 7.19%compared to last year.

➡️ Bottom Line: We’re seeing shifting conditions on a national scale, but real estate is always local. Be sure to check out our Local Lowdown for insights on what’s happening in your own neighborhood—and how to stay ahead in this evolving market.

BIG STORY DATA

THE LOCAL LOWDOWN

• Bay Area real estate markets show stark contrasts in May, with San Francisco surging while Silicon Valley's growth streak breaks and North Bay prices decline.
• Inventory dynamics vary dramatically across regions, East Bay and Silicon Valley see massive increases while San Francisco and North Bay experience sharp declines.
• The region's housing markets are increasingly polarized, with single-family homes generally favoring sellers while condo markets present significant opportunities for buyers.
• Despite varying market conditions, homes are selling relatively quickly throughout most of the Bay Area, though condos are taking considerably longer in some areas.

The Bay Area shows a clear split:

San Francisco led the Bay Area in May with strong price gains—single-family homes up 7.58% and condos up 8.26%, hitting two-year highs. In contrast, Silicon Valley cooled: Santa Cruz and San Mateo saw declines, while Santa Clara posted a modest 3.99% gain. Condos dropped sharply across the region, especially in San Mateo (-14.88%).

North Bay prices mostly fell, led by Napa’s 12.03% drop, though Marin edged up 2.72%. The East Bay was steady, with minor changes for homes but deeper drops for condos, especially in Alameda (-16.43%).

East Bay and Silicon Valley have rising inventory due to slower home sales, while San Francisco and the North Bayface declining supply. Homes are still selling quickly in SF and the East Bay, but condos—especially in Silicon Valley—are taking much longer to move. Single-family homes remain in a seller’s market, while condos are shifting toward buyers across the region.

➡️ Bottom line: Whether you’re buying or selling, property type matters more than location in today’s market.

EAST BAY

 NORTH BAY

SILICON VALLEY