Market Updates

Market update: 7.5% through 2027, 63% more sellers than buyers, four weeks left in the 2026 window

· by Alexander Good
Market update: 7.5% through 2027, 63% more sellers than buyers, four weeks left in the 2026 window
October 17, 2026
Three weeks ago rates hit 7.45% and the Fed started hiking. Since then the forecasters have rewritten 2027, the buyer pool has hit a record low, and prices have turned negative in 20 of California's 53 counties. This is the update that went to Properkey's seller clients across California. Every number is sourced and dated; links are at the bottom.

The short version

  • Fannie Mae now forecasts 7.5% mortgage rates for every quarter of 2027. A month ago it said 6.7%. MBA says above 7% through 2027. No major forecaster has a date for lower rates.
  • Freddie Mac's 30-year held at 7.40% this week, ending a seven-week climb; still the highest since November 2023. It was 5.98% in February.
  • Sellers outnumber buyers by 62.6% nationally, the widest gap on record. Riverside: 81% more sellers than buyers. Los Angeles: 73%. San Diego: 36%. Seven of the eight California metros Redfin tracks are buyer's markets; San Francisco is the only exception.
  • Purchase mortgage applications are down 16% from a year ago. Pending sales are at their lowest level since 2014.
  • 1 in 5 sellers cut price in September, 60.5% of homes sold below original asking, and 14.5% of contracts fell apart.
  • Twenty of California's 53 counties already show year-over-year price declines. San Diego detached price per square foot is down 4.6% since April; the Central Coast median is down 2.3%; Butte County's is down 10.6% in a year.
  • The FAIR Plan's 29.1% increase took effect Thursday, statewide. The Fed meets October 27–28, the election is November 3, then the holidays.
  • Lot owners: Prop 37 on the November ballot would hand builders a 3%-down buyer pool for new homes priced under 125% of the county loan limit, about $1.04 million in most of the state. It changes who your buyer is. Details in section 5.

1. Rates and the Fed

Freddie Mac's weekly 30-year rate held at 7.40% on October 15, the first week without an increase since August and still the highest since November 2023. A year ago it was 6.27%; in late February, before the Iran war, it was 5.98% (Freddie Mac). Daily quotes eased from a 7.61% peak on October 5 to 7.33% on October 15 because money moved into bonds on stock-market worries, not because inflation improved (Mortgage News Daily).
Inflation got worse. September CPI rose 0.6% in one month and 3.7% year over year; wholesale prices jumped 1.3%, the largest monthly increase since March 2022 (BLS, Oct 14–15). The Fed raised its rate to 3.75–4.00% on September 16, and sixteen of eighteen officials project at least one more hike this year (Federal Reserve). Futures price a December hike at 89.5% (CME FedWatch via Reuters, Oct 15).
The forecast change is the real news. Fannie Mae's September forecast had 6.7% for 2027. Its October forecast has 7.5% for every quarter of 2027 (Fannie Mae, Oct 14). The Mortgage Bankers Association's baseline is above 7% through 2027 (MBA, Oct 11). C.A.R.'s 2027 forecast assumes 6.6% and is the outlier (C.A.R., Oct 7).
What it means: on a $400,000 purchase with 20% down, principal and interest is about $2,216 a month at 7.40% versus $1,914 at February's 5.98%. Same buyer, same budget, 14% less house.

2. Buyers

Purchase applications were down 16% from a year ago in the week ending October 9, and 10.5% of applicants took an adjustable-rate loan (MBA, Oct 14). Fourteen percent of September rate locks were ARMs, the most in Optimal Blue's records (Optimal Blue, Oct 13). Creative financing means more conditions and more fallout.
Redfin counted 928,892 buyers in September, the fewest in its records, against 1.51 million sellers: 62.6% more sellers than buyers, a record for the fourth straight month, with 41 of 50 metros now buyer's markets. Riverside has 81.1% more sellers than buyers, Los Angeles 72.9%, Sacramento 43.2%, San Diego 36.3%, Anaheim 31.6%, Oakland 26.9%, San Jose 12.8%; San Francisco is the only California seller's market (Redfin, Oct 14). Redfin's Asad Khan: "This is a buyer's market born out of caution, not strength." Existing-home sales were down 2.2% from a year ago in September, with the West the worst region at −5.2% (NAR, Oct 13). NAR's Lawrence Yun: "Home sellers need to be realistic about local market conditions."

3. Inventory and competition

Months' supply is 4.8 nationally, the highest in over ten years (NAR). Pending sales fell 4% in September to the lowest level since spring 2014; 19.8% of sellers cut price, 60.5% of homes sold below original asking, and 14.5% of contracts were canceled, the most outside spring 2020 (Redfin, Oct 12). This week 22% of listings carry a price drop, the highest share in Redfin's records, and asking prices are down year over year for the first time since March (Redfin, Oct 15).
Builders are cutting too. The median new home sold for $393,700 in August, about $24,000 below September's median existing home, and roughly 80–90% of new-home sales now carry a builder-paid rate buydown (Census, Sept 24; Cotality via HousingWire, Sept 24).

4. Prices

The national median was $417,500 in September, up 1.3% year over year; the West is the only region where prices fell (NAR). Case-Shiller, July data: prices "fell in real terms for the 14th consecutive month" (S&P Cotality, Sept 29). California's August median was $901,420, flat year over year, with unsold inventory at 3.7 months, a six-month high (C.A.R., Sept 16). Twenty of the 53 counties C.A.R. tracks posted year-over-year price declines in August and 24 posted sales declines. Active listings were still below a year earlier in 38 of the 53 counties, so the pressure is coming from the buyer side, not from a flood of new listings. That is August data written at a 6.67% rate. Nothing published yet shows the market at 7.4%. Region by region below.

5. California by region

C.A.R. tracks five regions plus the Sierra and rural counties it groups as "other." August medians, year over year, with sales (C.A.R., Sept 16): Southern California $900,000, +2.9%, sales −4.8%. San Francisco Bay Area $1,272,000, −0.2%, sales −4.2%. Central Valley $500,000, +1.0%, sales +1.5%. Central Coast $1,075,000, −2.3%, sales −3.2%. Far North $389,000, +1.0%, sales +15.0%. Sales fell from a year earlier in three of the five regions and from July in four of the five. All of it written at a 6.67% rate.
Southern California: Los Angeles, Orange, and Ventura. Los Angeles County's median was $946,950 in August, up 1.7% (C.A.R.), but September shows the turn: the city median is down 1.7% with 29% of listings cutting price, and the Westside is down 3.9% at 65 days on market (Redfin, Sept). Redfin counts 72.9% more sellers than buyers in the Los Angeles metro, and pending sales there are down 16% from a year ago (Redfin, Oct 14 and Oct 12). Rents are down 1.1% year over year (Apartment List, Oct). Orange County looks firm on paper, $1,452,500, up 4.9%, but sales fell 3.4%, and the Anaheim metro has 31.6% more sellers than buyers with pendings down 15.5% (C.A.R.; Redfin). Ventura County: $925,000, down 1.3%, with sales down 11.9% (C.A.R., Aug).
Southern California: the Inland Empire (Riverside and San Bernardino). This is the most lopsided market in the state: 81.1% more sellers than buyers in the Riverside metro (Redfin, Oct 14). Riverside County's median was $632,990 in August, up 1.3% year over year but down 2.5% in one month, with sales down 5.9% and 4.0 months of unsold inventory; San Bernardino was $522,370, up 4.2%, with sales down 9.3% and 5.4 months of inventory, well above the state's 3.7 (C.A.R.). The Inland Empire is a first-time-buyer and FHA market, and the FHA rate is 6.98% (Mortgage News Daily, Oct 15).
Southern California: San Diego County. Judge value by price per square foot, not the median. Detached is $597 per square foot against a $622 April peak, down 4.6% in six months; attached is $541 against $601 in June 2024, down 10% (Real Report / SDAR Infosparks, Oct 13). September closings were down 13.9% for detached and 14.0% for attached from a year ago (SDAR, Sept). Weekly new pendings are running 30% below last year, and Daly expects 5–6 months of inventory within a few months, a level not seen since 2020. Distressed listings are 2.3% of detached and 4% of attached inventory, up from under 1%; a trend to watch, not a crash. Daly: "Transaction volume and DOM are clearly going to suffer until something in the market gives to bring buyers back to the table — price or rates."
San Francisco Bay Area. The top end is the one place still rising: San Francisco's median was $1,875,000 in August, up 25.0% on a small and volatile sample, and San Mateo's $2,250,000, up 13.2%, with 1.3 and 1.7 months of unsold inventory, the lowest of any large county (C.A.R.). San Francisco is also the only California seller's market in Redfin's count, with 10.6% more buyers than sellers; Oakland has 26.9% more sellers than buyers and San Jose 12.8% (Redfin, Oct 14). Santa Clara County's median held at $1.9 million, but sales fell 13.0% (C.A.R.). Condos and townhomes are the weak end: median down 8.1% year over year, inventory up 17.9%, 89 days of inventory (MLS data via Pope-Handy, Oct 6). San Jose overall is down 5.0% with 28.5% of listings cutting price (Redfin, Sept). Alameda $1,285,000, up 1.3%, sales down 8.8%; Contra Costa $875,000, up 2.9%, sales down 4.1%; Sonoma $790,000, down 5.1%, sales down 7.8%, at 60 days on market (C.A.R.).
Central Valley. The steadiest region in the state: median $500,000, up 1.0%, sales up 1.5%, one of only two regions where sales rose (C.A.R., Aug). Sacramento $549,000, down 0.2%, sales up 2.0%; Placer $692,500, up 2.6%, sales up 5.0%; San Joaquin $560,000, up 4.7%, sales up 14.8%. The southern valley is softer: Fresno $430,000, down 3.7%; Stanislaus $475,000, down 4.9%; Kern $400,500, down 3.5%, with sales down 17.2% (C.A.R.). The Sacramento metro still has 43.2% more sellers than buyers (Redfin, Oct 14).
Central Coast. The weakest region on price: median $1,075,000, down 2.3%, sales down 3.2% (C.A.R., Aug). Santa Cruz $1,370,000, down 1.9%, with sales down 15.1%; San Luis Obispo $955,000, up 2.1%, with sales down 16.7%; Santa Barbara $1,335,000, down 5.2%; Monterey $911,000, down 16.2%, a small sample that swings with which homes happen to sell (C.A.R.). None of the four counties is in Redfin's metro set.
Sierra foothills and mountain counties. C.A.R. groups these as "other counties," and they carry some of the deepest declines in the state: Calaveras $445,040, down 17.6%, on a small sample that swings hard month to month (Redfin has it down 11.2% in September); Tuolumne $389,000, down 10.6%; Nevada $530,000, down 5.4%; El Dorado $690,000, up 1.5%, with sales down 7.0%. Yuba is the exception at $452,500, up 2.8%, with sales up 38.2% (C.A.R., Aug; Redfin, Sept). Unsold inventory in these five counties runs 4.0 to 6.7 months, against 3.7 statewide.
Far North: Butte, Shasta, and Tehama. The Far North led the state on sales, up 15.0%, with the median $389,000, up 1.0% (C.A.R., Aug). Shasta $389,000, up 5.7%, sales up 15.7%; Tehama $340,000, down 2.9%. Butte is the outlier: the median fell 10.6% in a year while sales rose 3.2%, so buyers are active, at lower prices, and unsold inventory is 4.0 months. Oroville's median is $286,863, down 14.2% year over year, with 38% of listings cutting price; Chico is down 3.4% with 32% cutting (Redfin, Sept and Aug). Paradise has 541 active listings at 106 days on market (Movoto, Sept).
Vacant land and the November 3 vote. Three ballot measures could change who buys a vacant lot, and Prop 37 is the one that matters. It would give the buyer of a newly built home a state second mortgage of up to 17% of the price with 3% down, as long as the buyer is the first purchaser of that home and the price is under 125% of the county conforming loan limit: about $1.04 million in most of the state at the current $832,750 limit, and higher in the high-cost coastal counties (Secretary of State; LAO; FHFA limit via UWM). Nearly any home a builder would put on a lot in the foothills, the Far North, or the Inland Empire fits under that cap, and the LAO says all developers could build homes eligible for the program. The family who buys a lot and builds for themselves does not qualify; the builder who buys it, builds, and sells to a 3%-down buyer does, and a builder with that buyer pool has more room to pay for a build-ready lot than one selling to 20%-down buyers at 7.4%. At today's rates the buyer for a lot is a builder or cash. PPIC's September poll had it at 61% yes, 35% no (PPIC). Two caveats: the voter guide sets no start date, so the effect is on builders' 2027 land buying, not on closings this month, and the LAO calls the effect on construction unknown. Prop 45 would put deadlines on environmental review for housing projects, including a 365-business-day limit on environmental impact reports, which matters more to multi-lot builders than to a single lot (LAO). Prop 1 is an $11.25 billion housing bond with $1.1 billion for homeownership, including money for nonprofits acquiring land to build homes for low-income buyers, and $1.25 billion in veterans' home loans (LAO). This is a summary of the measures, not a prediction.

6. Insurance and new laws

A summary, not advice. Confirm with your carrier or attorney.
The FAIR Plan's 29.1% average increase took effect October 15 on new and renewal business statewide; higher-risk wildfire zones, including foothill and rural areas, are likely to land at or above the average, and some wildfire premiums will double (FAIR Plan; Oakview Insurance). State Farm has filed to resume writing new California policies for homes with an IBHS Wildfire Prepared Home Enhanced designation, targeting December if regulators approve; the Insurance Department says it is not open for new business yet (State Farm; CDI). Mercury gives 12.5–45% off the wildfire portion of the premium depending on hardening tier (Mercury).
SB 876, signed September 27: insurers must offer at least 50% extended replacement cost and code-upgrade coverage; the Insurance Department says it takes effect January 1, 2027, and the bill text phases provisions in by 2028. A buyer closing now should ask for extended replacement at binding (CDI). AB 1842, effective January 1, 2027: 180 days of mortgage forbearance, extendable to 12 months, when a home becomes uninhabitable in a federally declared disaster (Governor's office). Condos: Fannie Mae raises its HOA reserve requirement to 15% for applications dated on or after January 4, 2027 (Fannie Mae). Prop 37 (see the vacant-land note above) does nothing for resale homes and makes new construction a tougher competitor. Buyer financing: from November 1, Fannie Mae no longer accepts a lease to count rent on a home a buyer is converting to a rental, and from November 13 its underwriting flags questionable owner-occupancy claims and reprices them as investment loans (Fannie Mae). Expect more late-escrow surprises.

7. The bottom line

Direction: down and slowing. Rates are at 7.4% with no major forecaster calling for relief before 2028. Buyer counts are at a record low, inventory and price cuts are at record highs, nominal prices are flat statewide, real prices have fallen fourteen straight months, and 20 of California's 53 counties already show year-over-year declines. C.A.R.'s own forecast has the market "subdued through the end of 2026" with modest improvement in 2027 (C.A.R., Oct 7).
Temperature: Redfin scores a market by the gap between sellers and buyers. More than 10% more sellers than buyers is a buyer's market, within 10% either way is balanced, and more than 10% more buyers is a seller's market (Redfin). On that scale the U.S. is at +62.6%, Riverside +81.1%, Los Angeles +72.9%, Sacramento +43.2%, San Diego +36.3%, Anaheim +31.6%, Oakland +26.9%, San Jose +12.8%; San Francisco, at −10.6%, is the only California seller's market (Redfin, Oct 14). Seven of the eight California metros Redfin tracks are buyer's markets, and the national gap has widened four months in a row.
What that means for you: the buyer who is still out there is comparing your property against everything else in your area and your price range, and has more to compare it with than at any point in Redfin's records. Look at those listings yourselves, the way a buyer would. If you would like Properkey to pull the properties you are competing against, ask and we will send them.
I'm not talking the market down. I'm telling you what the data says. Properkey lists for $0 commission; I earn only if you choose to buy, finance, manage, or insure through us.

Sources

  1. Freddie Mac Primary Mortgage Market Survey, Oct 15, 2026: https://www.freddiemac.com/pmms | weekly history: https://fred.stlouisfed.org/series/MORTGAGE30US
  2. Mortgage News Daily rate index and Oct 15 commentary: https://www.mortgagenewsdaily.com/mortgage-rates/mnd | https://www.mortgagenewsdaily.com/markets/mortgage-rates-10152026
  3. U.S. Treasury daily yield curve, October 2026: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202610
  4. BLS September CPI (Oct 14) and PPI (Oct 15): https://www.bls.gov/news.release/cpi.nr0.htm | https://www.bls.gov/news.release/ppi.nr0.htm
  5. Federal Reserve: Sept 16 projections and FOMC minutes (released Oct 7): https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20260916.htm | https://www.federalreserve.gov/monetarypolicy/fomcminutes20260916.htm
  6. Reuters factbox, Oct 15, 2026 (CME FedWatch probabilities): https://www.investing.com/news/economy-news/factboxmajor-brokerages-expect-next-fed-rate-hike-in-december-4951431
  7. Fannie Mae October 2026 Economic and Housing Outlook (Oct 14): https://www.fanniemae.com/research-and-insights/forecast | coverage: https://www.housingwire.com/articles/fannie-mae-cuts-2027-mortgage-forecast/ | https://www.mpamag.com/us/mortgage-industry/market-updates/fannie-mae-just-dramatically-upped-its-2027-mortgage-rate-expectations/593529
  8. MBA 2027 forecast, annual convention, Oct 11, 2026: https://www.housingwire.com/articles/mba-originations-forecast-2027-rates/ | https://www.mpamag.com/us/mortgage-industry/market-updates/2027-mortgage-originations-to-fall-5-to-199-trillion-mba-forecasts/593085
  9. C.A.R. 2027 California Housing Market Forecast (Oct 7): https://www.prnewswire.com/news-releases/car-releases-its-2027-california-housing-market-forecast-302900082.html
  10. MBA Weekly Applications Survey, week ending Oct 9 (Oct 14): https://newslink.mba.org/mba-newslinks/2026/october/mortgage-applications-decrease-in-latest-mba-weekly-survey/
  11. Optimal Blue September Market Advantage report (Oct 13): https://www.send2press.com/wire/optimal-blue-report-non-qm-bucks-september-slowdown-as-mortgage-rates-surge/
  12. Redfin, sellers vs. buyers, September 2026 (Oct 14): https://www.redfin.com/news/buyers-vs-sellers-september-2026/
  13. NAR Existing-Home Sales, September 2026 (Oct 13): https://www.nar.realtor/newsroom/existing-home-sales-increased-1-5-in-september-according-to-nar-report
  14. Redfin September 2026 housing market report (Oct 12): https://www.prnewswire.com/news-releases/us-pending-home-sales-sink-near-12-year-low-302905207.html
  15. Redfin weekly housing market update (Oct 15): https://www.redfin.com/news/housing-market-update-asking-prices-decline-october/
  16. Realtor.com September 2026 housing report (Sept 30): https://finance.yahoo.com/real-estate/articles/price-cuts-reach-yearly-high-100000568.html | https://www.realtor.com/research/
  17. Census New Residential Sales, August 2026 (Sept 24): https://www.census.gov/construction/nrs/pdf/newressales.pdf | Cotality on buydowns (HousingWire, Sept 24): https://www.housingwire.com/articles/august-new-home-sales-incentives/
  18. S&P Cotality Case-Shiller, July 2026 data (Sept 29): https://press.spglobal.com/2026-09-29-S-P-Cotality-Case-Shiller-Index-Reports-Annual-Gain-in-July-2026
  19. C.A.R. August 2026 Home Sales and Price Report (Sept 16), regional and county tables: https://www.prnewswire.com/news-releases/california-home-sales-and-prices-rise-in-august-despite-higher-mortgage-rates-housing-costs-car-reports-302880932.html | https://www.car.org/en/marketdata/data/countysalesactivity
  20. Redfin market pages (data month as shown on each page): Oroville https://www.redfin.com/city/14078/CA/Oroville/housing-market | Chico https://www.redfin.com/city/3390/CA/Chico/housing-market | San Jose https://www.redfin.com/city/17420/CA/San-Jose/housing-market | Los Angeles https://www.redfin.com/city/11203/CA/Los-Angeles/housing-market | Westside LA https://www.redfin.com/neighborhood/92273/CA/Los-Angeles/West-Los-Angeles/housing-market | Calaveras County https://www.redfin.com/county/307/CA/Calaveras-County/housing-market
  21. Movoto Paradise market trends: https://www.movoto.com/paradise-ca/market-trends/
  22. SDAR Monthly Market Indicators, September 2026: https://sdar.stats.10kresearch.com/docs/mmi/x/report
  23. Real Report (Brian Daly), San Diego weekly, Oct 13, 2026 — SDAR Infosparks data (newsletter)
  24. Santa Clara County condo/townhouse report, Sept 2026 (MLS data via Pope-Handy): https://sanjoserealestatelosgatoshomes.com/santa-clara-county-real-estate-market/
  25. Apartment List Los Angeles rent report, October 2026: https://www.apartmentlist.com/rent-report/ca/los-angeles
  26. California FAIR Plan rate increase: FAIR Plan statement via KRCR (May 22, 2026) https://krcrtv.com/news/local/california-fair-plan-to-raise-homeowners-insurance-rates-about-29 | Oakview Insurance https://www.oakviewins.com/ca-fair-plan-rate-increase-2026/ | FAIR Plan key statistics https://www.cfpnet.com/key-statistics-data/
  27. State Farm newsroom (Sept 16): https://newsroom.statefarm.com/state-farm-in-california-understanding-the-issues/ | CDI alert (Sept 18): https://www.insurance.ca.gov/0400-news/0102-alerts/2026/Major-California-home-insurers-move-to-r.cfm | Mercury discounts: https://www.mercuryinsurance.com/local/california/homeowners-insurance/wildfire-mitigation/discounts/
  28. SB 876: CDI release (Sept 28) https://www.insurance.ca.gov/0400-news/0100-press-releases/2026/release034-2026.cfm | bill text https://legiscan.com/CA/text/SB876/2025
  29. AB 1842 (Ch. 241, Stats. 2026): Governor's office https://www.gov.ca.gov/2026/09/15/governor-newsom-signs-wildfire-recovery-package-to-strengthen-protections-and-focus-on-rebuilding-for-survivors/ | chaptered text https://legiscan.com/CA/text/AB1842/id/3458940
  30. AB 2050 (Ch. 796): Governor's office https://www.gov.ca.gov/2026/09/29/governor-newsom-signs-housing-legislation-cementing-californias-record-progress-to-reduce-unsheltered-homelessness-and-build-more-homes/ | text https://legiscan.com/CA/text/AB2050/2025
  31. Fannie Mae Lender Letter LL-2026-03 (condo reserves, Jan 4, 2027): https://singlefamily.fanniemae.com/media/document/pdf/lender-letter-ll-2026-03-updates-project-standards-property-insurance-requirements
  32. Fannie Mae DU v12.1 release notes, Nov/Dec 2026 (occupancy message, Nov 13): https://singlefamily.fanniemae.com/media/document/pdf/du-v-121-release-nov-and-dec-2026 | departing-residence rental income (SEL-2026-08, effective Nov 1): https://selling-guide.fanniemae.com/sel/b3-3.8-05/rental-income-non-subject-property-departing-residence
  33. Prop 37: Legislative Analyst's Office https://lao.ca.gov/BallotAnalysis/Proposition?number=37&year=2026 | Secretary of State voter guide https://voterguide.sos.ca.gov/propositions/37/index.htm | PPIC Statewide Survey, September 2026 https://www.ppic.org/publication/ppic-statewide-survey-californians-and-their-government-september-2026/
  34. Prop 45 (environmental review): Secretary of State voter guide https://voterguide.sos.ca.gov/propositions/45/index.htm | LAO analysis https://voterguide.sos.ca.gov/propositions/45/analysis.htm
  35. Prop 1 (housing bond): Secretary of State voter guide https://voterguide.sos.ca.gov/propositions/1/index.htm | LAO analysis https://voterguide.sos.ca.gov/propositions/1/analysis.htm | full list of November 3, 2026 measures: https://www.sos.ca.gov/elections/ballot-measures/qualified-ballot-measures
  36. Conforming loan limit ($832,750 one-unit, 2026; UWM's 2027 estimate $847,440): https://www.uwm.com/media-alert-september-16-2026
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