Ultra-Tight Inventory Is Defining Today’s SF Market

San Francisco has a real buzz right now – and you can feel it. Ever since the Fed’s first rate cut in late September, buyers have stepped off the sidelines and straight back into the market. New listings are moving fast, momentum is building, and everything, from luxury homes to long-stalled properties, is suddenly getting attention. After more than two years of flat pricing, the market finally feels alive again.

A big part of this shift is psychological. Lower rates have restored confidence, AI money continues to roll through the city, and there’s a renewed sense of optimism about San Francisco’s direction under Mayor Lurie’s leadership. All three forces are pushing sentiment in the same direction: forward.

But the real engine behind the price movement is inventory – or the lack of it. Our supply-and-demand imbalance, which has defined the SF market for years, has tightened even further this fall. New listings have dropped to some of the lowest levels we’ve seen in a long time, and that scarcity is driving prices up. October’s median home price reached its highest point in two years.

With so few options available, the homes that do come to market are selling quickly. Single-family properties are now averaging just 14 days before going into contract, and the condo side is feeling that same urgency.

We’ve included the relevant charts and graphs at the end of this newsletter so you can see exactly how these trends are playing out across the city.

What’s Happening Nationally

According to a new report from the National Association of Realtors, existing home sales are projected to rise 14% in 2026, supported by the hope of lower mortgage rates and a market that’s finally stabilizing after several turbulent years. But the path to easing rates is less certain than it seemed even a few weeks ago. What once looked like a likely December rate cut is now a coin-flip, with a divided Federal Reserve – some pushing to keep rates high to curb inflation, and others advocating for meaningful cuts to support hiring.

Headline Grabbers: Sprinklers & EEEs: What Homeowners Need to Know

As if rising insurance costs weren’t already weighing on California homeowners, new regulations are adding even more pressure. In San Francisco, an ordinance passed in 2022 will require fire sprinklers in older high-rise buildings – specifically those 12 stories or higher, built before 1975, and lacking two fire-wall-protected interior stairwells. Sprinklers are also required in new and renovated apartment buildings, new commercial properties, tourist hotels, and SROs with more than 20 rooms. Major renovations in existing buildings may also trigger sprinkler requirements depending on the size of the fire-affected area. Condo owners are pushing back, local politicians are trying to find compromises, and the battle is far from over.

Statewide, California has also strengthened safety rules for Exterior Elevated Elements (EEEs) – balconies, decks, walkways, and stairs that sit six feet or more above ground and rely on wood structural components. Under SB 721 and SB 326, multi-unit property owners (apartment buildings and condo associations with three or more units) must hire licensed professionals to inspect these elements and complete any needed repairs.

Current Mortgage Rates

The 30-year fixed-rate mortgage sits at 6.24% for the week ending November 13, 2025, while the 15-year fixed-rate mortgage is at 5.49%, numbers slightly below where they were last year at this time (6.78% and 5.99%, respectively). (Freddie Mac)

Mortgage Spreads

The chart shows the mortgage spreads, the difference between the 30-year mortgage rate and the 10-year Treasury yield, which lenders use as a key pricing guide. Mortgage spreads have dropped to their lowest level in years – and that’s good news for buyers. When the spread gets smaller, it means lenders feel more confident and don’t have to add as much extra cushion for risk. As a result, mortgage rates can fall even if Treasury yields aren’t moving much. In fact, without this improvement in spreads, today’s rates wouldn’t be anywhere near the 6% range. (Keeping Current Matters, Freddie Mac)

National Home Turnover at Lowest Rate in Decades

The chart reflects the findings of a recent Redfin report, which shows that only about 28 out of 1,000 homes have sold in 2025 – an incredibly low turnover rate and the slowest pace of home sales we’ve seen in recorded history. The three drivers considered responsible for this slowdown include affordability concerns, economic uncertainty and homeowners who were unwilling to move away from their locked-in low interest rates. (KCM, Redfin)

Mortgage Rates Trends

After starting the year above 7%, 30-year-fixed mortgage rates have been on a consistent downward slide, offering buyers more breathing room heading into 2026. (KCM)

Active Listings Nationwide

The chart shows active listings nationwide over the last 10 years, with inventory continuing to grow as interest rates ease, allowing homeowners to feel more comfortable with selling and letting go of their record-low rates. (KCM, Realtor.com)

San Francisco Median Sale Prices

San Francisco’s single-family home market is on fire, with the median price hitting a new two-year high in October – a 7.29% increase year over year. While condos aren’t seeing the same surge and continue to trade within their typical price range, competition remains intense across both segments. Single-family homes are now selling for an average of 114.2% of the original list price, and condos are closing at 101.9%, making below-asking purchases increasingly rare. (San Francisco MLS, InfoSparks)

San Francisco’s Shortage of Inventory

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 sellers’ market, whereas markets with more than three months of MSI are considered buyers’ markets.

Both the single-family home and condo markets are strong sellers’ markets, with 1.3 and 2.6 months of supply on the market, respectively. These figures represent year-over-year decreases of 38.10% and 49.02%, respectively. (San Francisco MLS, InfoSparks)

We Need Inventory!

These charts show what we’re living every day in the field: inventory is getting scooped up the moment it hits the market. Across both single-family homes and condos, San Francisco is moving at a pace we haven’t seen in years. Single-family homes are now selling in an average of just 14 days – a 7.69% year-over-year improvement. Condos are selling in 26 days on average, also faster, with a 13.04% year-over-year increase. With inventory continuing to dwindle, time-on-market is likely to shrink even further as buyers move more aggressively to compete. (San Francisco MLS, InfoSparks)