Quarelling between the Socialist-led government and mostly conservative regions - and also among regions - has hampered the response to the pandemic for months, exasperating citizens and creating uncertainty.
With total cases soaring this week to over a million, the health minister said the pandemic was out of control and recommended curfews.
But the government lacks a majority in parliament to push bold steps and override sometimes reluctant regions who decide on health matters and fear further economic damage as Spain already enters its worst recession since the civil war.
Though not ruling out more nationwide measures in the future, Sanchez announced no new moves for now, even as he kept repeating that more needed to be done. He said the 17 regions each needed to decide on next steps while citizens should impose their own limits.
"What we have to do is reduce movement and social contact. There is no other solution," he said in a televised address to the nation. "If we don't follow precautions, we are putting the lives of those we love most at risk."
Curfew complexities
Earlier on Friday, the northwestern Castilla and Leon region urged central government to impose night-time curfews quickly. Most other regions are also in favour of some form of curfew, but the powerful Madrid region opposes such a move.
Further complicating matters, regions do not have authority to impose curfews without a decision at national level.
"The virus doesn't understand administrative boundaries or different political stripes," Alfonso Fernandez Manueco, the regional leader of Castilla and Leon, told a news conference.
"We want this (a curfew) to happen today if possible, rather than tomorrow."
A record 20,986 COVID-19 cases were added in Spain on Thursday, bringing the official total to 1,026,281 - the sixth highest in the world after the United States, India, Brazil, Russia and Argentina.
However, Sanchez said that since not all cases are detected, the actual tally was likely over 3 million. The death toll stands at 34,521.
In Madrid, where a city-wide two-week lockdown expires on Saturday, regional authorities plan to move to more localised confinement in some neighbourhoods.
Socialising between different households will be banned across the city between midnight and 6 am.
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