The first half of 2026 has provided a clearer picture of where our local housing market is headed. While national headlines continue to focus on inflation, mortgage rates, and economic uncertainty, the story unfolding in San Pedro and Rancho Palos Verdes remains distinctly local. Limited inventory and the appeal of coastal living continue to drive buyer demand throughout the South Bay.
Mortgage rates remain one of the most significant factors influencing housing activity. While many buyers entered 2025 expecting rates to decline, the average 30-year fixed mortgage spent much of last year in the upper 6% range. The good news is that rates have improved modestly in 2026, helping restore buyer confidence. Although borrowing costs remain well above the post-pandemic lows, many consumers have adjusted to the reality that rates in the 6% range may be the new normal.
At the midpoint of 2026, the housing market is showing signs of stabilization. Buyers remain active but more selective, while sellers continue to benefit from limited inventory. This has resulted is a more balanced market, with neither buyers nor sellers holding a distinct advantage.
In San Pedro, there were 101 single-family residences sold between January and mid-June 2026, compared to 123 during the same period in 2025, which was a decline of nearly 18%. Median home prices softened from $1.050M to $999,000, a decrease of approximately 4.9%. Despite lower sales volume and pricing, homes sold faster, with average Days on Market (DOM) declining from 40 to 31 days. This suggests that motivated buyers continue to act quickly when appropriately priced homes become available. San Pedro’s long-term appeal remains strong. Continued investment in the waterfront, anticipation surrounding West Harbor, and the city’s unique combination of harbor views and coastal character continues to attract buyers seeking value compared to other beach communities.
Rancho Palos Verdes experienced a different trend during the first half of 2026. A total of 121 SFR’s sold compared to 133 during the same period last year, representing a decline of approximately 9%. However, home values continued to rise. The median sales price increased from $1.85M to $1.88M, while average DOM remained virtually unchanged at 53 days versus 52 days last year.
Across the Greater South Bay, the market remained steady. A total of 1,452 SFR’s sold during the first half of 2026, compared to 1,449 during the same period in 2025. The median sales price increased modestly from $1.285M to $1.3M, while average DOM improved slightly from 36 to 35 days. Despite affordability challenges, buyer demand remains healthy throughout much of the South Bay.
One of the most notable themes emerging this year is the difference between sales volume and pricing. In many areas, fewer homes are changing hands, yet values remain stable or continue to appreciate. Slightly lower mortgage rates have provided some relief for buyers in 2026, but affordability remains a challenge as home prices throughout much of the South Bay continue to hover near record highs. Today’s buyers are more selective, but well-priced homes in desirable neighborhoods continue to generate strong interest.
As we move into the second half of 2026, mortgage rates, inventory levels, and overall economic conditions will continue to influence market activity. While uncertainty remains, San Pedro and Rancho Palos Verdes continue to benefit from qualities that cannot be easily replicated: ocean views, waterfront access, established neighborhoods, and strong community identity. If mortgage rates continue their gradual decline and inventory levels improve, we could see increased transaction activity heading into 2027, particularly among move-up buyers who have remained on the sidelines.
Mike Harper and Peter Hazdovac are licensed Realtors® and co-owners of HH Coastal Real Estate, an independent local brokerage serving San Pedro, the Palos Verdes Peninsula, and the Greater South Bay.
