Published October 4, 2026 in Market Update

Higher rates are slowing some parts of this market more than others

By Brad Bell

Real estate, East & South San Jose - $900K+

Mortgage rates topped 7% in September, according to Redfin and Realtor.com. That matters here, but not equally everywhere. The Real Estate Data Aggregator counted 622 homes sold across East and South San Jose in the three months ending July 31, 2026. The numbers underneath that total tell a more useful story.

One pocket is sitting. Two others are not.

ZIP 95135, the Evergreen area, had 4.3 months of supply and a median of 43 days on market, per the Real Estate Data Aggregator. Homes there sold at 98.2% of list price on average. Only 17.7% sold above list. That is the slower end of this market.

ZIP 95121 and ZIP 95111 each sat at 1.4 months of supply, also from the Real Estate Data Aggregator. In 95111, the median days on market was 20, and 56.3% of homes sold above list. In 95121, 60.5% sold above list. Those two pockets are reading differently from 95135, even under the same rate environment.

What the gap means for sellers

In a 1.4-month market, a well-priced home does not wait long. In a 4.3-month market, buyers have options and they know it. Redfin reported that 16.8% of San Jose listings saw a price drop in the four weeks ending September 20, 2026. That rate is not spread evenly. The slower pockets absorb more of it.

What the gap means for buyers

In 95135, the Real Estate Data Aggregator shows homes sat a median of 43 days, up 27 days from the same period in 2025. That is real negotiating room. In 95121 and 95111, most homes still drew offers above list. Rates above 7% did not flatten competition there.

Realtor.com reported that 22.8% of West region listings had price reductions in September. That is a useful backdrop. But in the tighter ZIPs here, the local data tells a different story than the regional average.

One more data point from Realtor.com that puts the ownership market in context: the median asking rent in the San Jose-Sunnyvale-Santa Clara metro was $3,479 in August 2026, up 4.7% from a year earlier. At the same time, Realtor.com found that 22.5% of 0-2 bedroom rentals in the metro came with concessions that month. Rents are rising, but landlords are also working to fill units. For buyers weighing ownership against renting, that is the trade-off right now.

A few other ZIPs worth knowing

ZIP 95138 moved in the other direction from 95135. The Real Estate Data Aggregator counted 14 median days on market there, down 7 days from a year ago, with 53.9% of homes selling above list. ZIP 95116 had 3.9 months of supply and a median of 26 days on market, putting it closer to the slower end. ZIP 95133 had 1.4 months of supply but the median days on market rose 8 days year over year, so it is tighter on inventory but taking a little longer to close.

The price picture

Redfin reported San Jose home prices rose 0.9% month over month in August on a seasonally adjusted basis. The ZIP-level data from the Real Estate Data Aggregator shows more variation. ZIP 95135 saw a median sale price of $825,000, down 40.9% from a year ago. ZIP 95148 held at $1,600,000, up 1.9%. ZIP 95132 came in at $1,627,500, down 7%. The same rate environment produced very different price outcomes depending on location.