#United States #California #Home Sales #C.A.R.

California Housing Market Update: July 2025

The California housing market appears to be in a slump, with home sales remaining below last year’s levels for the fourth consecutive month, according to the California Association of Realtors (C.A.R.). July saw closed sales of existing single-family homes reach a seasonally adjusted annualized rate of 261,820, which is a slight dip from June's figures and a notable 4.1% decrease from July 2024.

The median home price for California also took a hit, coming in at $884,050 in July, a 1.7% drop from June and a marginal fall from the previous year. This marks a significant trend, as the median home price has dipped for three consecutive months, reaching the lowest level in five months.

As the spring homebuying season unfolds, expectations have not been met due to a combination of high mortgage rates and increasing economic uncertainty. Although mortgage rates recently decreased to their lowest since October 2024, buyers and sellers are showing caution, which has contributed to a slowdown in transactions. In July, the pending sales continued to decline for the eighth straight month, marking the most substantial year-over-year decrease since November 2023.

Heather Ozur, President of C.A.R., indicated that many potential buyers are holding back, waiting for a clearer understanding of both housing market conditions and the broader economy. As a result, housing demand is expected to remain subdued through August.

Jordan Levine, the Senior Vice President and Chief Economist at C.A.R., shared insights into the current market dynamics, noting that the sales-price-to-list-price ratio is hovering around 98.5%, down from 100% a year ago. This ratio indicates that on average, homes are selling slightly below their asking prices, highlighting the negotiation power that buyers currently hold.

Despite the challenges, there's some optimism regarding the future. If mortgage rates continue to decrease and buyers begin to regain confidence, we might witness an uptick in activity, potentially revitalizing the market. However, many real estate professionals remain cautious, considering external factors such as inflation, which might counteract the recent positive movements in interest rates.

When analyzing regional performance, only two out of five major regions in California posted year-over-year sales gains. Notably, the Far North region experienced a 4.8% increase, while the Central Coast saw a small gain of 1.7%. On the opposite end, the San Francisco Bay Area encountered the most substantial decline, witnessing a 4.1% drop.

On a county level, 18 out of the 53 counties monitored by C.A.R. reported year-over-year sales increases in July. However, many regions, including Mendocino, witnessed significant declines, with numbers dipping as low as 26.7%.

As for inventory levels, the unsold inventory index slightly decreased, suggesting fewer homes are coming onto the market compared to the previous month. The total active listings, however, rose by a staggering 37.7% from last year, hitting a 69-month high. This challenge of abundant supply amid decreasing demand presents an interesting dynamic for California’s real estate landscape.

In conclusion, the California housing market is at a crossroads, grappling with external factors influencing buyer confidence and levels of demand. Stakeholders are hopeful for recovery but remain watchful of economic trends that might affect housing affordability and sales activity in the coming months.