Staff Reporter
The California housing market could be entering a steadier phase after several years of volatility. According to the California Association of Realtors (C.A.R.), single-family home sales and median prices are both projected to rise in 2026. Although the gains will be modest compared with the sharp increases earlier in the decade, the outlook suggests more stability for buyers and sellers across the state.
Story Highlights
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Single-family home sales: Forecast to rise to 274,400 in 2026 from 269,000 in 2025
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Median California home price: Expected to reach $905,000 in 2026, up from $873,900 in 2025
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Affordability index: Projected at 18% in 2026, up slightly from 17%
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Mortgage rates: 30-year fixed expected to decline to 6.0% from 6.6%
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Active listings: Set to increase nearly 10% toward pre-pandemic levels
Slower Growth but Signs of Stability
C.A.R.’s forecast indicates that both California home prices and sales are inching upward. In 2026, the group expects 274,400 single-family homes to change hands, compared with 269,000 in 2025. The median home price could climb to a record $905,000, following an increase to $873,900 this year.
“Home prices in California are expected to rise in 2026, but the growth pace will remain mild when compared to rates we’ve seen in past years,” said C.A.R. President Heather Ozur, a Palm Springs REALTOR®.
Ozur added that the shift could offer a window for buyers who have been waiting on the sidelines:
“For would-be buyers who sat out the competitive market during the past couple of years, that means more opportunities as inventory increases moderately and lending conditions become more favorable. Seller confidence will also improve as home prices stabilize and demand begins to rise again next year after a slow 2025.”
Affordability Still Tight but Easing
Even with the projected improvements, the California housing market remains challenging for many families. C.A.R. expects the state’s housing affordability index to inch up to 18% in 2026 from a projected 17% in 2025 — still near historic lows. Only about one in six households would be able to afford a median-priced home.
The average 30-year fixed mortgage rate, however, is expected to decline to 6.0% from 6.6% in 2025. Lower borrowing costs could offer some relief. A study by HomeAbroad and Ziffy.ai found that at a 6% mortgage rate, buyers would need about $2,448 less in annual income to qualify for a loan. The savings could be even greater in high-cost areas, making it easier for middle-income earners such as teachers and first responders to purchase homes they previously couldn’t afford.
Market Risks and Economic Backdrop
C.A.R. Senior Vice President and Chief Economist Jordan Levine believes the gradual improvement in conditions will lift housing sentiment:
“As economic uncertainty begins to clear up in the next 12 months and mortgage rates start declining more consistently in the upcoming quarters, housing sentiment will see some improvement in 2026.”
Still, Levine warned that external risks remain. He cited ongoing trade tensions, California’s home insurance crisis, and the potential for a stock market bubble as factors that could weigh on the California housing market.
The forecast also reflects broader economic trends. U.S. GDP growth is expected to slow to 1% in 2026, while California’s job growth is projected at just 0.3%. The state’s unemployment rate is forecast to rise to 5.8%. Inflation is expected to average 3.0% in 2026, up from 2.8% in 2025. Active listings are projected to increase nearly 10%, bringing supply closer to pre-pandemic levels and giving buyers more options.
Outlook for Buyers and Sellers
The California Association of Realtors projects a market that is neither booming nor busting but gradually stabilizing. For buyers, slightly lower mortgage rates and a small rise in affordability could offer a long-awaited chance to enter the market. For sellers, steady California home prices may boost confidence after a sluggish 2025.
While challenges remain, the forecast suggests 2026 could mark the start of a more predictable chapter in the California housing market, setting the stage for cautious optimism among both buyers and sellers.
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