San Diego County pending home sales fell 13.1% in September from a year earlier — the fifth-biggest drop among the nation's 20 largest metros — as mortgage rates climbed to their highest level in nearly three years. Zillow reported the slump Thursday, and Freddie Mac pushed its average 30-year fixed rate to 7.40%, up from 5.98% in late February. For a median-priced county home around $1 million, that shift has already added hundreds of dollars to the typical monthly payment (San Diego Union-Tribune).
Why the rate climb is sidelining buyers
A pending sale is where a buyer's offer has been accepted but the deal is not yet final — and it is often the first signal of a market shift. San Diego's 13.1% drop put the county fifth among the nation's 20 largest metros, behind only Los Angeles (down 15.5%), Seattle (down 15.4%), Washington, D.C. (down 14.3%), and Baltimore (down 13.8%) (San Diego Union-Tribune).
"Sky-high mortgage rates and the usual fall slowdown teamed up to chill housing activity in September," Zillow chief economist Mischa Fisher said (San Diego Union-Tribune). The arithmetic explains why. The average 30-year fixed rate stood at 7.28% at the end of September and rose to 7.40% the following week, its highest level since November 2023. In late February it was 5.98%.
What higher rates cost a San Diego buyer
That rate jump hits monthly payments hardest in a county where the median single-family home has hovered around $1 million for most of the year. The Union-Tribune's math is instructive: on a $1 million purchase with 20% down, the principal-and-interest payment was roughly $5,160 at late-February rates and climbs to about $5,850 at late-September rates (San Diego Union-Tribune).
It is not just new-buyer demand pulling back. Rising rates are also holding down supply, because most sellers need to buy their next home too and are reluctant to trade a low rate for a near-three-year high. "Higher rates are holding back both demand and supply this fall, so it is unlikely that there will be significant downward pressure on home prices," said Lisa Sturtevant, chief economist at Bright MLS (San Diego Union-Tribune). In other words, this is a slowdown in transactions, not a price collapse.
What this means for sellers
The days of listing at a stretch price and waiting out the frenzy are gone. In this market, honest pricing from day one is what closes a deal — homes priced to match today's comps still sell, but on calmer timelines than the peak years. Supply sits around three months countywide, still below pre-pandemic levels, so a serious buyer pool remains. That is exactly the environment where staging, pricing strategy, and negotiation skill earn their keep.
If you are selling a home, resist anchoring on last spring's numbers. A median-priced home may be worth about what it was in August, but the pace of offers has slowed, and remaining buyers are comparing harder. Expect longer days on market and be ready to discuss concessions or a rate buydown rather than holding the line on price.
The buyer's silver lining
For buyers, the same slowdown cuts the other way. More inventory and calmer competition translate into real negotiating room: sellers are increasingly accepting below-asking offers, rate buydowns, and other concessions — conditions widely described as the friendliest for buyers since 2019.
The catch is affordability. The payment math still works against you until rates ease. One practical approach: ask your lender to run the monthly payment at today's rate and at a rate buydown, and compare what each buys you in home price. When rates dipped below 6% in February, sales jumped roughly 22% month over month — evidence of the pent-up demand waiting on the sidelines when financing gets cheaper (Glen Henderson).
The bottom line
A 13.1% plunge in pending sales is a genuine early warning, but it signals a drop in transaction volume, not prices. With rates near a three-year high and supply still tight, economists expect limited downward pressure on values even as activity cools. For sellers, that means price your home realistically from the start; for buyers, it means competition is easing, but affordability is the constraint that matters. Interest rates, inflation, and the economy will dictate what happens in the market over the next few months.
Running the payment at today's rate and again with a buydown is exactly the comparison I like buyers to see side by side. It turns a scary rate headline into a real number they can decide on.