The fall market in Silicon Valley has a very different feel than it did a year ago. Mortgage rates are higher, buyers have more homes to choose from, and prices are holding steady in some cities while easing a little in others. If you are thinking about buying or selling anywhere from Palo Alto to San Jose, here is a clear look at the latest numbers and what they mean for you.
Mortgage rates are higher than last fall
The average 30-year fixed mortgage rate was 7.32% for the week of October 22, 2026, according to Freddie Mac data reported by Trading Economics. That is a small dip from 7.40% the week before, but well above the 6.19% average a year ago. On a $1.2 million loan, that difference adds roughly $900 a month in principal and interest, which is why so many buyers are taking a careful second look at their budgets this season.
Santa Clara County: steady prices and more choices
The median price for a single-family home in Santa Clara County was $1,880,000 in September, down 4% from a year ago and up 1.6% from August, according to the Santa Clara County Association of REALTORS. Sales actually rose to 726 homes, up 3.7% from last September, and homes took an average of 27 days to sell compared with 25 a year ago.
The bigger story is balance. Redfin's Santa Clara County data, which counts all home types, shows 1,045 homes sold in September, up 2.9% from a year ago, with a median of 19 days on market, two days longer than last year. Homes sold for 102.3% of list price on average, and 52.6% sold above asking. Buyers have a little more breathing room, but well-prepared homes priced right still draw strong offers.
City by city
Every city in our area moves at its own pace. Here is how three very different markets looked in September, using Redfindata.
City | Median sale price, Sep 2026 | Change vs. Sep 2025 | Median days on market | Sale-to-list |
|---|---|---|---|---|
$3,608,282 | +0.9% | 13 | 107.1% | |
$1,643,717 | -0.7% | 20 | 103.0% | |
$1,349,357 | -5.0% | 22 | 101.1% |
Palo Alto is still one of the most competitive markets in the country, with homes going under contract in about two weeks and selling well over asking. San Jose has cooled the most, with prices down 5% and homes selling very close to list, which gives buyers more room to negotiate. Santa Clara sits right in the middle.
New gas water heater rules coming to Santa Clara County
If your water heater is getting older, this one is worth knowing about. The Bay Area Air District, which covers Santa Clara County, adopted rules in 2023 that phase out new natural gas water heaters and furnaces in favor of zero-emission models, which in practice means electric heat pumps. Under the current rule, home water heaters under 75,000 BTU must meet the new standard starting January 1, 2027, and furnaces follow on January 1, 2029. Gas stoves, cooktops and dryers are not covered.
The timing may shift. In July the Air District proposed moving the water heater date to January 2028 and adding exemptions for low-income owners, homes without room or ventilation for a compliant unit, and homes with electrical limits such as panels under 100 amps (Air District news release). The board is scheduled to vote on November 4, 2026 (Air District rule page). The rule applies only when a water heater is replaced, not to working units already in your home.
For sellers, buyers will ask about the age and type of your water heater, furnace and electrical panel, so have that information ready. For buyers, budget for a possible heat pump upgrade when an older gas unit needs replacing. Air District staff estimate a standard retrofit adds about $3,500, and San José Clean Energy offers rebates of $2,000 to $3,000 on heat-pump water heaters (Hoodline).
What this means for sellers
Buyers have more homes to compare, so pricing it right from day one matters more than it did a year ago. Homes that are clean, well presented and priced to the market are still selling above list, especially on the Peninsula and in the West Valley. An overpriced listing is the one that sits, so a careful look at recent sales on your street is the best place to start.
What this means for buyers
Homes sitting a little longer means more choice and more room to negotiate, especially in San Jose, where homes sold for 101.1% of list in September. Get fully pre-approved, ask your lender about rate buydowns and compare a few loan options before you shop. If you find the right home, buying now and refinancing later if rates fall can make sense for many buyers.
