I opened a Feedback last week FB21994772 for this issue, hoping it will get picked up this week so we can have a proper fix to this issue.

It is not fixed on macOS 26.4 beta or Xcode 26.4 beta. I believe I have found a workaround however: Set this value in Terminal and then restart Xcode and run Update to latest package versions. defaults write com.apple.dt.Xcode IDEPackageSupportUseBuiltinSCM 1 I have verified this works for me with Xcode 26.3 and 26.4 on macOS 26.4 beta after previously having the issue above.