Sellers Pulled Back in May. What That Actually Means for Veterans and Military Buyers in June.

The Zillow May 2026 Market Report, released June 4, shows the national housing recovery has paused. New listings nationwide dropped 0.8% month over month and are now 4.1% below last May. Sales rose 4.8% month over month but ran 2.9% below last May. The typical U.S. home value sits at $368,720 (up 0.6% month over month, up 0.8% year over year). The San Diego picture, using Zillow's most recent ZHVI data, shows the typical home value at $950,012, down 1.7% year over year, with 26% of San Diego metro listings having received a price cut. For veterans, military buyers, first-time buyers, and PCS families moving into North County San Diego in June and July, the May pullback by sellers actually widens the window rather than closing it.

The Zillow chief economist called it "back on pause." That language is accurate for the national picture. The San Diego picture is different. This blog walks through what changed between the April report and the May report, what those changes mean for the VA loan buyer in North County San Diego, and what to actually do with the data in June.

The Two Months Side By Side

Here is the cleanest way to see what shifted in 30 days.

Read this as a national-level pause and a San Diego-level continuation of the pattern that has been favorable to military buyers all year. The metro is still down year over year. Inventory is still elevated relative to 2024 and 2025. The number that changed most in May was seller behavior, not buyer behavior.

What Sellers Pulling Back Actually Does to a VA Buyer

This is the counter-intuitive piece most market reports do not unpack for the military or first-time buyer.

When sellers pull back, two things happen at once. First, fewer new listings hit the MLS in any given week. That sounds bad for buyers. Second, the homes already on the market face less new competition from newer listings, which tilts negotiation leverage toward the buyer on those existing listings. The home that has been sitting 30, 40, or 56 days suddenly has more time to sit, and the seller's willingness to negotiate climbs each week without new pressure from fresh comparable listings.

For a veteran or military buyer in North County San Diego who has been touring the same 8 or 10 active listings for the past month, May's seller pullback means those exact properties are increasingly negotiable. The seller who refused a price reduction in April is more receptive in June, because no new listings hit the block to revalidate their original price.

The data backs this up. 26% of San Diego metro listings have received a price cut, up from the 23.5% national figure in the April report. San Diego sellers are negotiating at a higher rate than the national average.

The Year-Over-Year Math That Still Matters

Headlines about a national pause obscure the year-over-year picture, which is what determines whether the wait-or-buy decision actually changed.

National year-over-year, May 2026:

• Typical home value up 0.8% (essentially flat in real terms after inflation)
• Typical monthly mortgage payment down 3.1% from last May
• Active inventory up 1% from last year, the 30th consecutive month of year-over-year inventory growth

San Diego specifically:

• Typical home value down 1.7% year over year (ZHVI as of late April update)
• 26% of listings with price cuts vs around 22-23% nationally a year ago
• Inventory countywide in the 4,500 to 4,800 active range, well above 2024 levels

The veteran or military buyer who looked at this market in May 2025 and decided to wait is looking at a measurably better deck in June 2026. Prices are flat to negative. Inventory is meaningfully higher. Negotiation leverage has shifted. The structural argument for continuing to wait has weakened, even as the headline says "pause."

What Changed That Buyers Should Care About

Three specific changes from the April to May report that affect VA loan buyers and first-time buyers in North County San Diego right now.

Mortgage rates ticked up. The monthly payment on a typical U.S. home climbed 1.1% from April to May. For a VA buyer running BAH-versus-payment math, this means rechecking the calculation with current rate quotes rather than April's. The difference is real but small on a $750,000 VA loan, the rate-driven payment increase from April to May is roughly $50 to $75 per month, not a deal-breaker but worth knowing.

Inventory growth decelerated. The April report showed active inventory up 3.7% year over year nationally. The May report shows that growth slowed to 1.0%. The pace of new options coming online is slowing. For a buyer who has been on the sidelines, this is the first signal in 2026 that the buyer-favorable inventory window may be closing in the second half of the year. The Zillow chief economist specifically flagged this as a possible foreshadowing of slower sales later in 2026.

San Diego price cut share kept climbing. While national new listings dropped, sellers already on the market kept negotiating. 26% of San Diego metro listings have cut their price at least once. On a property sitting 45 or 60 days, the right offer with appraisal gap coverage and a 21-day VA close looks more attractive in June than it did in April.

What Specifically Changed for VA Buyers in May

Two month-specific items worth knowing.

First, the May 1, 2026 VA appraisal changes (Change 46 to VA Pamphlet 26-7) are now fully in effect for any VA appraisal ordered on or after May 1. The five items removed from the Minimum Property Requirements (detached structures, exterior paint on post-1978 homes, interior paint on post-1978 homes, radon certification for new construction, oxygen depletion sensor certification for ventless fireplaces) are no longer evaluated. This is your single largest competitive advantage in negotiating a VA offer in June. The full breakdown is at a recent post.

Second, for PCS families: the inventory deceleration favors buyers who can close in the next 90 days. If your report date is in July, August, or September 2026 and you have not yet started the lender conversation, this is the data that says start now. The buyer competition in the second half of 2026 looks like it is going to be tougher than the first half.

The June Action Plan for Military Buyers and First-Time Buyers

Three concrete moves for VA loan buyers, military buyers, and first-time buyers in North County San Diego based on the May data.

1. If you already have a property under offer or in contract: Verify with your lender that the appraisal was ordered on or after May 1, 2026 so you benefit from the Change 46 MPR cuts. If it was ordered in late April, ask about the cost and timeline of reordering.
2. If you are actively shopping but have not written an offer: Re-examine the listings that have been sitting 30 or more days. The seller's willingness to negotiate has measurably increased in May. A property that turned down a $25,000 below-list offer in April may accept the same offer in June, especially with a fully underwritten VA pre-approval and appraisal gap coverage in writing.
3. If you are on the sidelines waiting: Run your BAH-versus-payment math against current rates within the next two weeks. The inventory deceleration signal is real and the back half of 2026 is unlikely to be as buyer-favorable as the first half. The window for a calm, less competitive shopping environment is the next 60 to 90 days.

The April 2026 market data breakdown is at a recent post. More VA loan and military buyer notes are on the blog.

Frequently Asked Questions

What did the Zillow May 2026 market report say about San Diego?

The Zillow May 2026 report, released June 4, shows the national housing recovery paused after a friendlier April. New listings nationwide fell 0.8% month over month and 4.1% year over year as sellers pulled back. Sales rose 4.8% month over month but fell 2.9% year over year. For San Diego specifically, the typical home value is $950,012 according to Zillow's ZHVI, down 1.7% year over year, and 26% of metro listings have received a price cut a higher share than the national average.

Is now a good time for a veteran or military buyer to buy in San Diego?

The May 2026 data points to a still-favorable window for veterans, active-duty military buyers, and first-time buyers in San Diego, but it is closing rather than opening. Inventory growth decelerated from 3.7% year over year in April to 1.0% in May. Sellers already on the market are negotiating more (26% have cut price). The veteran or military buyer who is ready to write an offer now is shopping in better conditions than they will face in the second half of 2026.

Why are sellers pulling back in May 2026?

Mortgage rates continued to rise through April and May, which discourages move-up sellers who would need to take on a new, higher-rate mortgage. Sellers with low locked-in rates from 2020-2022 are choosing to stay rather than list. This is the same dynamic that has constrained inventory for the past three years and showed up acutely in the May data with new listings dropping 4.1% year over year.

Did mortgage rates go up between the April and May reports?

Yes, modestly. The typical U.S. monthly mortgage payment rose 1.1% from April to May, according to the Zillow May Market Report. On a typical home with 20% down, that increase translates to roughly $20 to $30 per month. On a higher-priced San Diego VA loan, the impact is proportionally similar. Compared to last year, mortgage payments are still 3.1% lower nationally, so the year-over-year picture remains friendlier than 2025.

What do you think the June 2026 report will show?

The Zillow June Market Report is scheduled for release July 7, 2026. The most likely direction based on the May trends is continued deceleration of inventory growth, continued elevated price-cut share among existing listings, and continued mild upward pressure on mortgage payments. The June numbers will tell us whether the second-half-of-2026 buyer competition increase is starting to materialize. What numbers from this month most caught your attention? Comments are open below.

The Next Step

The Zillow June Market Report drops July 7, 2026. Between now and then, the data we have is the most current available, and the action window for the buyer-favorable conditions is shorter than it was 30 days ago. If you want a specific North County San Diego submarket pulled (Oceanside, Carlsbad, Vista, San Marcos, Escondido), or you want your BAH and rank run against current rates and the latest market data before deciding whether to write an offer in June or July, you can reach out here or call me at (619) 485-8293.

This content is for informational purposes only and is not legal, tax, or financial advice. Market data sourced from Zillow May 2026 Market Report, published June 4, 2026, and Zillow Home Value Index data current as of late April 2026 update. All real estate services comply with NAR, HUD, and California DRE regulations.