San Francisco Inventory Drops 13% As Prices Fall

California’s housing market is sending mixed signals heading into fall. Nationally, home prices notched their tenth straight month of annual declines even as inventory keeps climbing and delistings ease — but the state’s big metros aren’t moving in lockstep. San Francisco inventory shrank sharply even as its prices fell, while San Jose listings grew and Los Angeles held roughly flat. Mortgage rates ticked back up to 6.71% this week, new U.S. listings hit a four-year high, and California’s pool of equity-rich homeowners has thinned considerably since last year. For investors, the picture is one of patience and selectivity rather than panic or a rush to the sidelines.

In The News:

Realtor.com — Delistings Trend Below Last Year's Pace As Summer Comes To An End (September 2, 2026) — The August housing report shows the national median list price down 1.3% year over year, a tenth straight month of declines, while delistings fell 12.6% from last year. California metros diverged sharply: San Francisco inventory dropped 13.0% as prices fell 5.0%, San Jose inventory rose 9.0% while prices slipped 2.1%, and Los Angeles inventory held nearly flat as prices eased 4.5%.

Freddie Mac — Mortgage Rates Average 6.71% (September 3, 2026) — The 30-year fixed-rate mortgage averaged 6.71% this week, up from 6.66% a week earlier and 6.50% a year ago. The 15-year fixed rose to 6.04%. Chief economist Sam Khater noted purchase demand has stayed relatively stable as buyers adapt to shifting rate conditions heading into the fall selling season.

Redfin — Homebuyers Have More Fresh Options Than They’ve Had In 4 Years (September 3, 2026) — New U.S. listings rose 2.1% week over week to their highest level since 2022, up 8% annually to 383,795 over the trailing four weeks. Pending sales stayed essentially flat, down 2.5% year over year, as growing supply and sluggish demand widen a buyer’s-market gap in much of the country.

firsttuesday Journal — California's Shrinking Home Equity (September 2, 2026) — Citing Attom data, the share of California mortgaged homes considered equity-rich fell from 56% in Q2 2025 to 45% in Q2 2026. The piece attributes the drop mainly to homeowners tapping equity through additional borrowing rather than falling prices, leaving many sellers closer to the roughly 10% equity threshold needed to cover a sale.

InvestmentNews — US Housing Market Flashes Mixed Signals For Investors In August 2026 (August 28, 2026) — Foreclosure filings rose 10% annually to nearly 40,000 in July and completed foreclosures jumped 23%, even as prices held resilient near $400,649 nationally. Active inventory hit its highest level since May while pending sales fell to a six-month low, a setup analysts describe as a slow rebalancing that rewards selectivity.