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alifornia's real estate market is expected to see some improvement in 2025, with house sales projected to increase by 10% to around 304,400 transactions. This would still make it the third-slowest year since the Reagan administration, with only 2023 and 2024 being slower. House prices are also expected to continue rising next year, but at a slightly slower pace than in 2024.

    The median house price is predicted to reach a record high of $909,400, nearly doubling over the past decade. CAR economists attribute this growth to increased demand driven by lower borrowing costs and an influx of new buyers and sellers entering the market. With interest rates expected to drop to 5.9% next year, many homeowners who have been "locked-in" due to low pandemic-era payments may be more likely to sell their properties.

    However, CAR Chief Economist Jordan Levine notes that while increased inventory may provide some relief, it won't necessarily lead to falling prices. The housing shortage will continue to drive demand and keep the market competitive, resulting in rising prices. Existing house prices have increased in 12 of the past 13 years, according to CAR figures.

    The forecast also predicts a cooler economy in 2025, with US GDP growth slowing to 1.1% compared to this year's projected increase of 1.9%. Unemployment is expected to rise slightly, but inflation will fall to the Federal Reserve's target of 2%, down from 2.9% this year. The forecast suggests a "soft landing" is becoming increasingly likely.