The Federal Reserve raised interest rates this week for the first time since 2023, even as Berkeley’s market keeps appreciating at a level that seems to have little to do with what is happening in Washington. In this September 2026 Berkeley real estate market update I walk through August’s inflation, jobs, and producer price reports, this week’s Fed decision and what it signals for the rest of the year, and where mortgage rates and home prices stand today, then turn to what it means if you are buying or selling in Berkeley this fall.

The Economic Backdrop

The Consumer Price Index rose 0.4 percent in August and 3.4 percent over the year, the same annual pace as July, while core inflation, which excludes food and energy, eased to 2.4 percent year over year from 2.5 percent in July even as it ran hotter than expected on a monthly basis. Shelter costs rose 0.3 percent for the month and 3.0 percent over the year, a touch cooler than July’s annual pace but still the largest single contributor to the index. Gasoline jumped 3.9 percent in August and is up 27.4 percent year over year, which is why headline inflation did not soften the way core inflation did.

The labor market told a different story. The economy added 162,000 jobs in August, well above the roughly 55,000 economists expected, and June and July payrolls were revised up by a combined 55,000. The unemployment rate held at 4.1 percent, and wages rose 3.1 percent over the year. Leisure and hospitality led the gains, while information and financial activities both shed jobs.

Producer prices further complicated the picture. The Producer Price Index rose 0.4 percent in August and 5.4 percent over the past year, with the increase concentrated in energy and diesel fuel rather than spread broadly across the economy. Together, a resilient labor market and core inflation that is cooling is the kind of mixed signal that gave the Fed cover to move this week.

The Fed and Mortgage Rates

The Federal Reserve voted unanimously on Wednesday to raise the federal funds rate by a quarter point, moving the benchmark range to 3.75 to 4.00 percent, its first increase since July 2023. The move followed months of building pressure after the committee’s July 29 hold, which passed on a divided 9 to 3 vote with three regional presidents dissenting in favor of a hike, and Chair Kevin Warsh’s hawkish remarks at Jackson Hole in late August. The committee’s updated projections show the median official expects at least one more quarter point increase before year end, so I would not treat this week’s move as a one-time adjustment. Whatever your view of the decision, the practical takeaway for anyone buying or selling in the next several months is that borrowing costs are more likely to drift higher than lower from here.

Mortgage rates jumped in the days after the meeting. Freddie Mac put the 30-year fixed rate at 6.95 percent for the week of September 17, up from 6.76 percent the week before and 6.26 percent a year ago. The 15-year fixed rose to 6.26 percent. On a $1.4 million Berkeley home with 20 percent down, financing $1.12 million at 6.95 percent runs about $7,415 a month in principal and interest, roughly $140 more than the same loan would have cost just a week ago. Taxes and insurance typically add well over $1,500 more, which is why I encourage buyers to model their full monthly expense rather than anchoring on specific mortgage rates.

National and California Housing

Nationally, sales cooled further in August. The National Association of Realtors reported that existing-home sales fell 2.0 percent from July to a 3.98 million annual pace, down 1.2 percent from a year earlier, with the median price up 1.6 percent year over year to $429,100 and inventory climbing to a 4.9 month supply, its highest level in over a decade.

California, as is often the case, is a different story. The California Association of Realtors reported that statewide sales rose 2.4 percent from July to a 269,620 annualized pace, up 1.4 percent from a year earlier, while the median price climbed back above $900,000 to $901,420. The Bay Area itself lagged that statewide gain, with sales down 4.2 percent year over year and the regional median essentially flat. As always, statewide and regional medians tell you almost nothing about the inner East Bay, where prices, days on market, and buyer behavior operate under different conditions.

Berkeley: A Different Market

Berkeley’s median sale price over the three months ending in August was $1,469,028, up 8.8 percent from a year earlier, on 204 closed sales, also up from a year ago. Homes are selling in a median of 15 days, two days faster than last year, at nearly 27 percent over list price on average. Eighty percent of Berkeley homes sold above list this summer, drawing an average of six competing offers, among the tightest conditions in the Bay Area. Alameda County’s own August median was $1,285,000, up 1.3 percent year over year, with homes selling in a median of 14 days on just 2.3 months of unsold inventory, still among the tightest supply in the state even as county-level sales volume slowed.

On the ground, that competition is concentrated in well-prepared homes in Elmwood, North Berkeley, and Thousand Oaks, where buyers are moving quickly to compete. Homes with an unresolved condition issue, a foundation or sewer lateral question in the flatlands, or a seismic concern in the Hills, are the ones sitting past 30 days, even in a market this tight. BESO, Berkeley’s Building Emissions Saving Ordinance, continues to come up in nearly every transaction I work on, since the required energy assessment is triggered at the point of sale and the compliance upgrades typically fall to the buyer.

Guidance for Buyers and Sellers

If you are buying, this week’s hike and the Fed’s signal of more to come are reasons to lock in your purchase at today’s rates rather than wait for relief that is now less likely to arrive this year. Run your numbers on my Buyer Net Sheet and mortgage calculator so your offer reflects what you can actually afford, not just what you are pre-approved for.

If you are selling, six offers per listing and 80 percent of homes selling over list is about as favorable a backdrop as this market offers, but it still rewards preparation over hope. Use my Seller Net Sheet to see your true proceeds after commissions and transfer tax, complete your BESO assessment before you list, and if you are weighing whether to sell now or wait, my seller opportunity cost calculator can show you what waiting actually costs in real numbers.

Looking Ahead

Between now and the Fed’s next meeting on October 27 and 28, watch for the September jobs report due October 2 and the September CPI report due October 14. Both will weigh heavily on whether the committee follows through on the additional increase its projections point to. In Berkeley, I expect the same pattern to hold into the fall regardless of what the Fed does next: well-prepared listings in desirable locations moving quickly with multiple offers, and anything with unresolved condition questions sitting until priced accordingly.

If you want to talk through what any of this means for your own timeline, I am glad to model specific scenarios with you. You can reach me at [email protected], at (510) 708-9952, or through my contact page.