Higher mortgage rates affect both sides of a real estate transaction. For buyers, higher borrowing costs can impact monthly payments and purchasing power. For sellers, they can influence buyer demand, how buyers evaluate a home and which terms may help bring a transaction together.
As of September 17, 2026, the average 30-year fixed mortgage rate was 6.95%, according to Freddie Mac. While mortgage rates fluctuate, today's borrowing costs remain an important consideration for anyone thinking about making a move.
For buyers and sellers in Encinitas, Del Mar, Carlsbad, Cardiff-by-the-Sea, Solana Beach and throughout North County San Diego, understanding how to navigate a higher-rate environment can make a meaningful difference.
What's Happening in the San Diego Housing Market?
Despite higher mortgage rates, San Diego County home values have remained resilient. In August 2026, the median sale price reached approximately $962,000, up 5.7% from a year earlier. At the same time, available inventory was down 5.6% year over year, and homes sold in a median of just 28 days. CAR.org
However, higher borrowing costs and affordability pressures are affecting buyer activity. Pending sales were down 13% year over year, suggesting that while fewer buyers are moving forward with purchases overall, well-priced homes are still attracting attention. CAR.org
That combination is important for both buyers and sellers. Higher mortgage rates haven't automatically translated into lower San Diego home prices, in part because the supply of available homes remains relatively limited.
For buyers, opportunities to negotiate can vary significantly depending on the property, price range and location. For sellers, today's market reinforces the importance of pricing correctly from the beginning, as buyers are increasingly selective and focused on overall value and monthly payment.
Market conditions can also vary considerably from one San Diego community to another, making it important to look at the local market rather than relying solely on national housing headlines.
What Higher Mortgage Rates Mean for Buyers
When mortgage rates rise, buyers may qualify for less than they would at a lower rate, or simply decide to spend less to keep their monthly payment comfortable.
That's why today's buyers are looking beyond the purchase price and considering the complete cost of homeownership, including the mortgage payment, property taxes, insurance and other expenses.
But higher rates don't necessarily mean putting a home purchase on hold.
Depending on the property and circumstances, there may be opportunities to negotiate terms that help with affordability. A seller credit, for example, may be used toward certain eligible closing costs or discount points that reduce the buyer's interest rate. The Consumer Financial Protection Bureau explains how discount points can be used to lower an interest rate and how credits can affect closing costs and mortgage terms.
Temporary rate buydowns may also be an option for some transactions and loan programs. Fannie Mae outlines requirements for temporary interest-rate buydowns, including situations where buydown funds are provided by an interested party to the transaction. Because the rules, costs and long-term implications vary, buyers should discuss these strategies with a qualified lender before deciding whether one makes financial sense.
Should Buyers Wait for Mortgage Rates to Come Down?
It's a question we're hearing more often: Should I wait until mortgage rates drop before buying?
There isn't one answer that applies to every buyer.
A lower mortgage rate can improve purchasing power, but lower rates can also encourage more buyers to enter the market. In desirable San Diego communities where housing supply can already be limited, that may mean increased competition for the right homes.
Rather than trying to perfectly time interest rates, buyers should consider the complete picture; the home, purchase price, monthly payment, available inventory and their own timeline and financial goals.
What Higher Rates Mean for San Diego Sellers
Higher mortgage rates matter to sellers, too.
When financing becomes more expensive, buyers tend to become more payment-conscious and selective. That makes pricing, presentation and negotiation especially important.
In some situations, a seller may choose to offer a credit toward eligible buyer closing costs or a rate buydown rather than making a larger adjustment to the purchase price. Whether that makes sense depends on the property, market conditions and the seller's priorities. The Consumer Financial Protection Bureau explains that buyers and sellers can negotiate for the seller to provide a credit toward certain closing costs, depending on the transaction and applicable requirements.
It's also important to look beyond the headline offer price. Financing, contingencies, closing timeline, credits and other terms can all affect the strength of an offer.
The highest-priced offer isn't always identical to the best financial outcome for a seller.
The Right Terms Can Matter as Much as Price
In a higher-rate environment, informed negotiation can become increasingly valuable.
For buyers, that may mean evaluating a seller credit, rate buydown or other terms that could improve the overall economics of the purchase.
For sellers, it means understanding what today's buyers are facing and determining whether certain terms could make a property more attractive while still protecting the seller's financial objectives.
Every transaction is different, which is why it's important to evaluate the complete offer rather than focusing on a single number.
Looking Beyond Today's Mortgage Rate
Mortgage rates are an important part of the real estate market but they're only one piece of the decision.
For buyers, the right property, purchase price and financing strategy may matter more over the long term than trying to perfectly time a particular mortgage rate. You can always refinance at a lower rate later!
For sellers, understanding current buyer behavior can help inform pricing, property preparation and negotiations.
Real estate decisions are highly individual. What makes sense for one buyer or seller may not make sense for another.
As local real estate advisors, we help our clients understand the options available to them, navigate negotiations and evaluate the complete picture, not just today's interest rate.
If you're considering buying or selling in Encinitas, Del Mar, Carlsbad, Cardiff-by-the-Sea, Solana Beach or other areas of San Diego County, we're happy to be a resource as you evaluate your options.
