When mortgage rates rise, the first reaction is often: “Why would I buy now?” The less obvious effect is that higher borrowing costs can push some buyers to the sidelines. With fewer people competing for the same homes, the buyers who remain may have more room to negotiate.
Are mortgage rates rising right now?
As of September 24, 2026, Freddie Mac reported an average 30-year fixed mortgage rate of 7.03%, up from 6.95% the prior week and 6.30% a year earlier. That makes affordability harder for many buyers and can reduce the number of people actively shopping.
Can higher interest rates turn housing into a buyer's market?
They can help shift negotiating power toward buyers because the same monthly budget supports a smaller loan when rates rise. Some would-be buyers pause their searches, and homes that do not attract immediate offers may face more pressure to adjust price or offer concessions.
Nationally, buyers have recently gained leverage through more seller concessions and price reductions. San Diego is more complicated because housing supply remains relatively tight.
Are San Diego home prices actually going down?
The answer depends on which price measure you use. Realtor.com reported that San Diego's median listing price in August 2026 was down 5.4% from a year earlier. At the same time, Redfin's rolling three-month data showed a median sale price around $999,000, up 5.2% year over year. Those figures are not contradictory: listing prices and closed-sale prices measure different groups of homes and different stages of the market.
So we would not tell a buyer that rising rates mean “housing prices will go down.” A better conclusion is that elevated rates can cool demand and sometimes create opportunities to negotiate even when overall prices have not fallen.
Where buyers may gain leverage
- Homes that have been sitting: longer days on market can make a seller more receptive to a realistic offer.
- Price reductions: a prior reduction can signal that the original price did not match current demand.
- Seller credits: credits may help with eligible closing costs or, depending on the loan structure, a temporary or permanent rate buydown.
- Repairs and contingencies: a less frantic market can make it easier to conduct due diligence rather than waiving protections just to compete.
- Fewer bidding wars: higher rates can reduce the pool of competing buyers, although desirable San Diego homes can still receive multiple offers.
Why a lower purchase price can matter
A mortgage rate can potentially be changed later through a refinance if rates fall and the borrower qualifies. The price you pay for the property cannot be refinanced away. That does not mean you should buy solely because rates are high, or assume refinancing will be available later. It means purchase price and negotiating terms deserve as much attention as today's rate.
What should San Diego buyers compare?
Instead of trying to perfectly time rates or home prices, compare real scenarios: the home's negotiated price, your down payment, seller credits, estimated payment, cash to close and the loan programs available to you. Our San Diego mortgage options guide covers conventional, FHA, VA, jumbo and non-QM financing, and our FHA vs. conventional guide is a useful starting point for first-time buyers.
If you are deciding whether to delay a purchase, see our Should I Wait Until 2027 to Buy a House in San Diego? guide for a side-by-side framework.
Sources: Freddie Mac Primary Mortgage Market Survey, September 24, 2026; Redfin San Diego housing-market data for the three months ending August 2026; Realtor.com San Diego market data for August 2026.
Frequently asked questions
Do higher mortgage rates make home prices fall?
Not automatically. Higher rates can reduce buyer demand, but home prices also depend on inventory, local demand, seller behavior and the mix of homes being sold.
Is San Diego a buyer's market in 2026?
Conditions are more nuanced than a simple buyer-versus-seller label. Some buyers have more negotiating opportunities, while San Diego inventory remains relatively constrained and well-priced homes can still be competitive.
Can a seller help with a buyer's mortgage rate?
Depending on the transaction and loan program, negotiated seller credits may sometimes be used toward eligible closing costs or rate-buydown structures, subject to program and lender limits.
This article is for general educational purposes only and is not a commitment to lend, financial advice, or a prediction of future home prices or mortgage rates. Real estate conditions vary by neighborhood and property, and mortgage rates, programs, guidelines and eligibility can change.