California Housing Market Surges in February with Record Home Sales Amid Lower Mortgage Rates

California Housing Market Rebounds

In February 2025, the California housing market showed a remarkable recovery, with statewide home sales hitting the highest point in more than two years. According to the California Association of REALTORS® (C.A.R.), existing single-family home sales reached a seasonally adjusted annualized rate of 283,540, reflecting an impressive 11.6% increase from January and a 2.6% rise compared to February 2024.

Key Statistics and Insights

The data indicates that February's figures were the strongest since October 2022, marking a significant turnaround after a sluggish start to the year. The statewide median home price in February was recorded at $829,060, showing a slight decrease of 1.2% from the previous month but an increase of 2.8% year-over-year from $806,480 in February 2024. Year-to-date sales have increased by 0.4% so far.

Despite these positive trends, it is worth noting that home sales have not surpassed the crucial 300,000 mark since September 2022. Economic uncertainties, particularly regarding mortgage rates and the possibility of a recession, could continue to influence housing sentiment and sales figures in the upcoming months.

C.A.R. President Heather Ozur highlighted that the renewed buyer activity and an increase in available homes contributed to the market's growth in February, citing that declining borrowing costs made homeownership more accessible, particularly for those previously deterred by affordability issues. Increasing inventory also helped reduce some competitive pressures that have characterized the housing market in recent years.

Regional Performance

From a regional perspective, the performance varied across California. The San Francisco Bay Area saw a 3.5% increase in sales compared to the previous year, leading the gains within the state's five major regions. In contrast, other regions such as Southern California, Central Valley, and the Far North experienced a decline in sales.

Statistics showed that 23 out of 53 counties monitored by C.A.R. reported year-over-year sales increases, with the most significant surge observed in Calaveras County at 35.5%. On the other hand, Tehama County suffered the largest drop at 43.5%, which regional analysts suggested might be linked to inclement winter weather affecting buyer activity.

Pricing Trends

February marked the 20th consecutive month of year-over-year median price increases across the state; however, the gain recorded for the month was the smallest since July 2023. The median price per square foot for existing single-family homes rose from $407 last February to $421 this February.
It is also essential to mention that February is typically when home prices start to increase as the market gears up for the busy spring season, with the expectation that current trends in mortgage rates will stabilize later in the year, thus fostering a more conducive environment for potential buyers.

Additionally, all but one of California's major regions noted an increase in median prices compared to the previous year, with the Central Coast and Southern California recording the highest growth rates. Meanwhile, the San Francisco Bay Area experienced a marginal decline of 0.5%, a first for the region in five months, suggesting potential shifts in market dynamics influenced by affordability shifts.

Conclusion: A Cautiously Optimistic Outlook

The overall sentiment in the California housing market for February suggests cautious optimism. The latest figures indicate that as buyers return to the market and inventory levels rise, there is potential for continuity in this upward trajectory throughout 2025, despite external economic pressures that could challenge growth.

As we move through the spring homebuying season, the challenges of fluctuating mortgage rates, buyer confidence, and regional disparities in accessibility could all play significant roles in shaping ongoing market trends across the state.

In summary, California's housing market in February reflects a mixture of resilience and demand amidst ongoing challenges, with analysts closely watching the evolving dynamics as the year progresses.