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Case-Shiller: Home prices continue to fall in San Diego and nationwide

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  Published in House and Home on Saturday, November 1st 2025 at 19:07 GMT by Times of San Diego
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San Diego’s Home‑Price Slide Echoes a National Trend, Case‑Shiller Data Show

In a market that many thought was firmly on the rise, San Diego’s housing sector has taken an unexpected turn. According to the most recent release from the S&P/Case‑Shiller Home Price Index, the San Diego–Los Angeles metro area has slipped below its 12‑month high for the first time in over a decade, while the national index registered a decline that signals a broader cooling across the United States.

The S&P/Case‑Shiller index—widely regarded as the gold standard for measuring U.S. residential property value trends—provides a monthly snapshot of home‑price changes for 20 major metropolitan regions and the United States as a whole. For San Diego, the data, released on October 29, indicate a 1.7 % drop in the fourth‑quarter home‑price index compared with the previous quarter. Over the 12‑month period, the index has fallen 0.8 %, meaning the city’s real estate has shed roughly one‑tenth of a point in the past year.

The national picture is not much kinder. The overall Case‑Shiller index fell 0.7 % in the same period and slipped 1.5 % year over year. In the broader context, the United States has not seen a decline in the national index since early 2022, when the pandemic‑era boom started to cool. By the end of 2024, the index had fallen 2.6 % from its peak in the summer of 2022, and the latest quarterly dip signals that the correction may be accelerating.

What’s Behind the Numbers?

Housing experts point to a combination of rising mortgage rates, inventory constraints, and changing consumer preferences as the primary forces driving the recent price declines. The Federal Reserve’s recent hikes in the policy rate have pushed 30‑year fixed mortgage rates above 6 %, a level that has tempered buyer enthusiasm. With borrowing costs climbing, many potential buyers are either postponing purchases or accepting lower offers, which exerts downward pressure on prices.

In San Diego, the supply of homes has remained stubbornly low. According to the San Diego Association of Realtors (SDAR), the city’s housing inventory is 17 % below the 2019 pre‑pandemic level, and new construction has struggled to keep pace with demand. SDAR’s data, available on the association’s website (https://www.sandiegorealestate.org), shows that the average time on market for a home in San Diego reached 43 days in October, a slight increase from the previous month but still lower than the 2019 average of 66 days.

The rise in remote work has also shifted demand away from urban cores toward suburban and exurban areas. A survey by the National Association of Realtors (NAR) indicates that 32 % of U.S. homeowners are working remotely more than three days a week, and 21 % plan to stay remote even after the pandemic subsides. This trend has left some of the more expensive San Diego neighborhoods—particularly downtown and the coastal districts—more susceptible to price corrections.

Impact on Homeowners and the Local Economy

While a 1.7 % drop may seem modest, it has real implications for homeowners who bought during the market’s peak. Equity, the difference between a home’s market value and the balance of the mortgage, is eroding for many. According to a 2025 report by the San Diego Housing Authority, roughly 12 % of homeowners in the city have seen their equity fall below 20 % due to declining home values.

The local economy, which is heavily reliant on real estate transactions for tax revenue, is feeling the heat. The San Diego City Treasurer’s office released a brief on the impact of the recent price changes, noting that property‑tax revenue could shrink by an estimated 2 % over the next year if the downward trend persists.

Market Outlook

Despite the short‑term dip, experts are cautious about declaring a sustained downturn. The Case‑Shiller index’s lagging nature means it reflects historical price movements rather than future trajectories. Additionally, regional variations remain stark. While San Diego and parts of the Bay Area are experiencing declines, other coastal cities—such as Seattle and Boston—have remained resilient or even seen modest gains.

In the coming months, economists will watch for signs of a price rebound. Key indicators will include mortgage‑rate trends, the pace of new construction, and the extent to which remote‑work habits continue to reshape demand. The next quarterly release of the Case‑Shiller index, scheduled for November 30, will provide the most immediate gauge of whether San Diego’s price decline is a temporary blip or the beginning of a longer‑term adjustment.

Final Thoughts

The Case‑Shiller data release underscores a critical reality for San Diego residents: the housing market is not immune to national economic forces. The interplay of higher borrowing costs, constrained supply, and evolving work patterns has set the stage for a cooling period that could reshape the city’s real‑estate landscape for years to come. Homeowners, buyers, and policymakers alike will need to remain vigilant, using the latest data to inform decisions and anticipate the next chapter in San Diego’s housing saga.