Six 2026 Housing Predictions: Why San Francisco Won’t Play by National Rules

Every December, economists release their carefully worded predictions for the year ahead. Think of those forecasts as the weather report. Now think of mine as the microclimate version. Same region, completely different outcomes depending on which hill you live on.

So here are my predictions for 2026, broken in two: the national view and what I believe will actually happen here in San Francisco. No crystal ball needed, just two decades of watching this market reinvent itself every time someone declares it dead.

1. Existing Home Sales

National prediction: Sales will tick up slightly. Nothing dramatic, just a little more movement as rates ease and inventory expands.

My San Francisco prediction: Sales will rise more than “slightly.”

Not a frenzy, but absolutely a meaningful jump. People in The City have been holding their breath for years, waiting for a window where making a move finally makes sense again. That window is opening. Add the continuing surge of AI-driven job growth and confidence among well-qualified buyers, and our market wakes up faster than the country at large.

2. Home Prices

National prediction: Flat. Maybe up a hair, maybe down a hair. A whole lot of “meh.”

My San Francisco prediction: Up.

Not a boom, but a steady climb that outpaces the national average. This is still one of the most supply-constrained cities in the country. When demand returns even a little, pricing reacts. New development is limited, sellers remain selective, and buyers who have been circling are ready to land. That combination does not create flat prices. It creates upward pressure.

3. Inventory

National prediction: Finally back to pre-pandemic levels. Buyers everywhere breathe easier.

My San Francisco prediction: Not a chance.

Inventory here will rise a bit, but we are not returning to pre-pandemic anything. Our sellers do not flood the market; they drip into it. Many decide to remodel instead of move. Others rent their places out. And some simply have no urgency to leave The City they love. We remain a chronically undersupplied market, and 2026 keeps that pattern intact.

4. Homeownership Rate

National prediction: Declining. Renters stay renters. Affordability squeezes out first-time buyers.

My San Francisco prediction: Stable with a slight increase at the higher end.

San Francisco has never followed the national homeownership trends. The people who buy here tend to have strong incomes, stock compensation, or equity from previous properties. Those buyers are well-positioned and re-entering the market with purpose. Meanwhile, long-term residents who can buy are choosing to stay rooted rather than wait for a mythical perfect moment.

5. Recession Risk

National prediction: No recession in 2026. Slow growth, but growth nonetheless.

My San Francisco prediction: The national mood matters less than people think.

San Francisco is entering another reinvention cycle. AI hiring is still accelerating. Tourism is returning. Commercial recovery is slow but moving. Even if the national economy wobbles, the buyers who shape our housing market rarely slow down at the same pace. The City lives in its own strange, stubborn ecosystem.

6. Mortgage Rates

National prediction: The mid-sixes dipping toward six. A collective sigh of relief.

My San Francisco prediction: Rates matter here, but not in the way they do nationally.

When rates drop even a little, our move-up buyers wake up. Downsizers get motivated. First-time buyers who have been priced out find a path in. And because our inventory does not expand to match that enthusiasm, competition quietly increases. Rates will help, but the real story is how buyers behave when they believe the worst is behind them.

So what does 2026 look like for San Francisco?

San Francisco will outpace the national market. Quietly. Steadily. Predictably. Not in a bubble, not in a boom, but in the way this city always does when confidence returns: through persistent demand, limited supply, and the kind of buyers who do not wait for perfect conditions.

2026 will not feel like a rocketship. It will feel like forward motion. And that is exactly what this city needs.

National forecasts are fine, but just like the weather, real understanding comes from being here. I am your local barometer for how the market is truly moving.