Bay Area housing market: SF surges, San Jose dips, and City Hall rewrites the affordability playbook — June 2026
San Francisco's three-month median hit $1.70M, up 16.1% year over year, while San Jose softened to $1.47M (−1.4% YoY) — the two South Bay mega-markets are moving in opposite directions. Freddie Mac's 30-year rate ticked back to 6.52% today, and San Francisco announced plans to more than double its Affordable Housing Trust Fund to $125M annually, paired with a cut to inclusionary housing requirements.
The Bay Area put up two very different scorecards in May. San Francisco posted its hottest spring numbers in years while San Jose cooled for the third consecutive month, and mortgage rates ticked back up to 6.52% this week. Meanwhile, City Hall unveiled the most substantive policy rewrite on affordable housing in more than a decade.
Prices: San Francisco surges, San Jose slides
San Francisco's median sale price hit $1,699,000 over the three months ending May 2026, up 16.1% year over year — the sharpest annual gain the city has recorded since the post-pandemic run-up. 1 Homes sold in 14 days on average, down from 18 days a year ago, and the average sale-to-list ratio reached 114.9%, a 7.7-point jump from May 2025. Hot homes are going 31% over asking.
The county-level C.A.R. data for April 2026 adds further texture: single-family homes in San Francisco County closed at a median of $2,127,500, up 19.5% year over year, with sales volume up 10.3% year over year. 2 That is a wide gap from the broader Bay Area region's April median of $1,400,000, which was actually down 1.3% year over year — San Francisco is pulling the region's price trend in opposite directions.
San Jose tells a different story. The city's three-month median through May was $1,469,000, down 1.4% year over year — the first meaningful softening since the late-2024 AI hiring surge lifted South Bay prices. 3 Sale-to-list dropped 1.1 points to 103.6%, and the Compete Score sits at 54 out of 100, well below San Francisco's 91. Santa Clara County's April C.A.R. median was $2,100,000, down 1.0% year over year, while Alameda County (Oakland and East Bay) came in at $1,325,000, off 1.9% year over year. 2
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Statewide context: California's April median hit a record $914,810, up 0.4% year over year and the first reading above $900K since May 2025. Bay Area counties are running 45–133% above that benchmark. 2
Inventory and demand: tight, then tighter
The 1,668 homes sold in San Francisco in May were up from 1,448 a year ago — a 15% volume gain that underscores how much demand absorbed what little supply came to market. 1 The city's Compete Score of 91 means most buyers are in bidding wars; the 91st percentile nationwide puts San Francisco ahead of major metros including New York and Los Angeles.
San Jose moved 1,632 units in May, up from 1,529 a year earlier (a 6.7% gain). 3 Volume is rising, but the price softness suggests sellers are competing more than buyers — a pattern consistent with a modest inventory build in the South Bay following a quiet Q4 2025 leasing season in the tech corridor.
The Bay Area as a region recorded Bay Area region sales up 18.8% month over month and 5.5% year over year in April. California statewide hit 275,580 seasonally adjusted sales, up 3.9% month over month and 4.1% year over year — the fastest annual pace since early 2024. 2
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Mortgage rates: 30-year climbs back to 6.52%
Freddie Mac's PMMS released today (June 11) put the 30-year fixed rate at 6.52%, up four basis points from 6.48% last week. The 15-year fixed moved to 5.84% from 5.79%. 4 A year ago, the 30-year averaged 6.84%, so buyers today are saving roughly 32 basis points — meaningful on Bay Area loan sizes.
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On a $1,200,000 loan (a representative San Jose down-payment-adjusted scenario) at 6.52%, the monthly principal-and-interest payment works out to approximately $7,615 — using M = P × [r(1+r)^n] / [(1+r)^n − 1], with r = 0.0652/12 and n = 360. At last year's 6.84%, that same loan would have cost about $7,846/month — a $231 monthly difference, or $2,772 annually.
Freddie Mac noted that stronger employment momentum lifted rates this week, and that existing home sales have hit a five-month high. Buyers are increasingly pricing through rate volatility rather than sitting out for a decisive move lower.
Policy: SF rewrites the affordability rulebook
San Francisco announced its most significant affordable housing policy shift in over a decade on May 19. The package, put forward by Mayor Daniel Lurie and Supervisor Myrna Melgar, has two main parts. 5
Housing Trust Fund expansion. A charter amendment heading to the November 2026 ballot would gradually raise the city's annual contribution to the Affordable Housing Trust Fund to $125 million per year — more than double the current $52 million. An additional $70 million in revenue bonds would be issued next year specifically for purchasing small rental buildings under the Small Sites Program and converting them to permanent affordable housing. The amendment still needs Board of Supervisors approval to reach the ballot, then a simple majority from voters in November.
Inclusionary requirement cut. For projects with 25 or more units, the mandatory on-site affordable share drops to 5%. Developers can also choose to pay an in-lieu fee or provide off-site units equivalent to 10% of total units; projects under 25 units would be fully exempt. The change follows the city's Inclusionary Housing Technical Advisory Committee's finding that current requirements were choking feasibility for projects eligible under last year's Family Zoning Plan.
The tradeoff is deliberate: lower the bar for market-rate developers in exchange for a much larger and more reliable public subsidy stream for deed-restricted units. Whether it delivers more units — or just more developer margins — will depend heavily on whether the November ballot passes.
What to watch
- Rates: The PMMS has moved in a 14-basis-point range (6.38%–6.52%) since early May. A sustained break above 6.60% would put meaningful pressure on San Jose affordability; SF demand has proven resilient to rate moves in this range.
- Supply: C.A.R.'s next Bay Area update will indicate whether Santa Clara County's April inventory reading was a blip or the start of a longer correction cycle.
- Ballot: SF's Housing Trust Fund charter amendment heads to the Rules Committee in July before potentially reaching November's ballot.
- FAIR Plan: California's insurer of last resort has a 30% rate increase scheduled for October 2026 — a wildfire-season factor already chilling demand in higher-risk Peninsula zip codes.
References
- 1Redfin — San Francisco Housing Market
redfin.com
- 2C.A.R. April 2026 Sales & Price Report
prnewswire.com
- 3Redfin — San Jose Housing Market
redfin.com
- 4Freddie Mac PMMS — June 11, 2026
freddiemac.com
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