California’s housing market closed out 2025 with modest gains in sales, signaling resilience amid cooling prices and shifting mortgage dynamics. For the fourth consecutive month, home sales rose from both the previous month and year, with annual activity finishing just shy of 1% above 2024 levels.
Data from the California Association of Realtors (C.A.R.) show that closed escrow sales of existing single-family homes reached a seasonally adjusted annualized rate of 288,200 in December 2025. This represents a 0.3% increase from November’s 287,450 and a 2% gain from December 2024’s 282,490. On an annual basis, statewide sales averaged 271,590, up 0.9% from the prior year.
While closed sales strengthened, pending transactions reflected the typical seasonal slowdown and lingering uncertainty over mortgage rates, dropping 21.5% month-to-month and slipping 0.2% year-over-year.
“California’s housing market closed out 2025 on solid footing, with both home sales and available inventory improving over the prior year,” said Tamara Suminski, 2026 C.A.R. President. “With mortgage rates retreating to near three-year lows and price growth easing, the stage is set for a more balanced market in 2026, offering buyers increased opportunities.”
Prices Retreat Amid Elevated Inventory
The state’s median home price fell to $850,680 in December, a 10-month low and down 0.4% from November. Year-over-year, prices dropped for the second time in three months, marking the largest annual decline since June 2023. C.A.R. analysts attribute the decline to softening demand and sustained inventory levels, which have cooled competition and created a more level playing field for buyers.
“Housing affordability improved modestly in the fourth quarter,” said Jordan Levine, C.A.R. Senior VP and Chief Economist. “Lower mortgage rates and a growing supply of homes should encourage more buyers to enter the market in 2026, supporting gradual, sustainable growth.”
Regional and County-Level Performance Highlights
California’s housing trends varied significantly by region:
- The Far North (+23.5%) and Central Coast (+12.8%) posted double-digit year-over-year sales growth.
- Central Valley (+5.5%), San Francisco Bay Area (+2%), and Southern California (+1.7%) recorded more modest gains.
- At the county level, 39 of 53 counties saw annual sales increases, with Plumas (+133.3%), Mono (+100%), and Lassen (+44.4%) leading the gains. Del Norte (-50%) and Mariposa (-35.3%) posted the steepest declines.
Median price growth was concentrated in three major regions: the Far North (+2.8%), Southern California (+0.6%), and the Central Coast (+0.2%). Prices fell in the Central Valley (-1.4%) and remained unchanged in the Bay Area. At the county level, Mono (+27.1%), Imperial (+21.5%), and Lassen (+18.1%) led gains, while Trinity (-23%), Glenn (-18.6%), and Siskiyou (-15.5%) faced the largest drops.
Inventory and Market Pace
Total active listings rose year-over-year for the 23rd consecutive month, though growth slowed to its weakest pace since February 2024. The Unsold Inventory Index–a measure of how long it would take to sell all homes on the market at the current pace–stood at 2.7 months in December, unchanged from a year earlier but down from November’s 3.6 months. The median days on market increased to 36, up from 31 in December 2024, while the statewide sales-price-to-list-price ratio slipped to 97.9%.
Mortgage rates provided additional relief, with the average 30-year fixed rate falling to 6.19% in December, down from 6.72% a year earlier.
Outlook for 2026
With softer prices, improving affordability, and falling mortgage rates, California’s housing market enters 2026 with cautious optimism. Analysts expect steady, moderate sales growth, supported by elevated–but gradually stabilizing–inventory, as the state moves toward a more balanced market that favors both buyers and sellers.
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