#United States #Sacramento #Real Estate Trends #C.A.R. #California Housing

California Housing Market Ends the Year Strong

In December 2025, California's housing market experienced a notable uptick, concluding the year on a robust note. According to the California Association of Realtors (C.A.R.), the sales of existing single-family homes rose to a seasonally adjusted annualized rate of 288,200 units, reflecting a 0.3% increase from November and a 2.0% rise compared to December 2024. This marks the fourth consecutive month of sales growth for the state, showcasing a resilient market despite ongoing economic challenges.

The statewide median price for homes reached $850,680 in December, a slight decrease from $853,780 in November and also lower than $861,020 in December of the previous year. The annual sales volume for 2025 recorded a modest increase of 0.9% from 2024, while the annual median price rose by 1.2%. This resilience in the housing market indicates improving conditions that contribute to both sales dynamics and pricing structures.

Strong Finish Amidst Economic Challenges

Tamara Suminski, the C.A.R. President for 2026, commented on these developments, highlighting that the California housing market has closed out the year “on solid footing.” She noted that improvements in home sales and inventory levels indicate a more favorable environment for buyers and sellers alike. As the market adjusts to low mortgage rates—now nearing a three-year low—there are growing opportunities on the horizon for prospective homebuyers.

Despite the positive end-of-year figures, December also exhibited some fluctuations in pending home sales, which showed a decline of 21.5% month-over-month, reflecting typical seasonal slowdowns compounded by volatility in mortgage rates and economic uncertainty. The slight year-over-year decrease of 0.2% in pending sales is an indication that buyers are becoming increasingly cautious as they navigate the shifting market dynamics.

Inventory Pressures and Price Adjustments

The median home price decline of 0.4% from November to December, defying the typical seasonal growth, suggests a cooling competition in the housing market. This marked the largest year-over-year decrease since June 2023, as softer demand and a growing inventory were evident.

Regional distinctions were notable, as each California region recorded varied year-over-year sales growth, with the Far North (23.5%) and Central Coast (12.8%) showing significant advances. In contrast, the Central Valley (5.5%) and Southern California (1.7%) experienced more subdued gains. Notably, some counties even recorded striking surges in sales, with Plumas County showing an astounding 133.3% increase.

Maintaining a balanced market will be crucial in 2026, as the C.A.R. experts predict that the combined effects of lower mortgage rates and increased home supply could entice hesitant buyers back into the market this year, helping improve housing affordability.

Looking Ahead to 2026

As experts analyze the California housing market forecast for 2026, optimism lingers despite policy uncertainties. The expectation of modest economic growth carries with it the prospect of sustained improvement in housing conditions. Throughout December, it took an average of 36 days to sell a home, compared to 31 days in December 2024, demonstrating a modest increase in time on the market as sellers adjust to the changing landscape.

C.A.R.'s data also elaborates on price metrics indicating a 97.9% sales-to-list-price ratio, which exhibits the negotiating landscape for buyers and sellers. With an average interest rate for 30-year fixed mortgages at 6.19%, a decline from 6.72% a year earlier, affordability is anticipated to gain traction as the year progresses.

As California navigates its housing market in the upcoming months, the interplay of inventory levels, pricing, and buyer interest will play critical roles. The insights gleaned from December’s data inject hope into the California real estate landscape, with an eye towards a cautious but promising year ahead.