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alifornia’s 2026 housing outlook signals a steady, modest rebound. The California Association of Realtors (C.A.R.) projects a 2 % rise in single‑family sales—about 274,400 homes—up from 269,000 in 2025. While not a boom, it marks a return to normalcy after a period of volatility.
Median prices are expected to hit a new record of $905,000, a 3.6 % increase from the projected $873,900 in 2025. This growth is far slower than the double‑digit gains of recent years, indicating a shift toward sustainable appreciation. C.A.R. president Heather Ozur notes that price gains will remain mild compared to past surges.
Affordability improves modestly. The Housing Affordability Index climbs to 18 % in 2026 from 17 % in 2025 and 16 % in 2024, meaning a slightly larger share of households can afford a median‑priced home. This is largely driven by a projected drop in the average 30‑year fixed mortgage rate to 6.0 % in 2026, down from 6.6 % in 2025. Rates remain above pre‑pandemic levels but are well below the long‑term average of nearly 8 %.
Economic fundamentals support the forecast. U.S. GDP growth is expected to slow to 1 % in 2026, with California’s non‑farm job growth at 0.3 % and unemployment projected at 5.8 %. Inflation is estimated at 3.0 %, slightly higher than 2.8 % in 2025, but the lower mortgage rates should offset some purchasing‑power erosion.
Inventory is set to improve, with active listings up nearly 10 % and supply approaching pre‑pandemic levels. More homes on the market give buyers leverage and forces sellers to price competitively. Senior VP and Chief Economist Jordan Levine predicts a gradual lift in housing sentiment as rates fall and uncertainty eases.
Challenges remain. Trade tensions, a persistent home‑insurance crisis, and potential stock‑market volatility could dampen confidence and slow the market. These headwinds underscore the need for cautious optimism.
For buyers, the 2026 forecast offers a more approachable market: slightly higher affordability, steadier price growth, and better inventory. Strategic, informed purchasing can yield favorable terms. Sellers should set realistic expectations; while prices will rise, the era of inflated offers is likely over. A well‑priced, well‑presented home will still attract interest, but patience and market‑aware pricing are key.
In summary, California’s housing market is moving from extreme volatility toward a balanced, predictable trajectory. Buyers and sellers alike can benefit from smart, data‑driven decisions rather than chasing luck.
