T
he California Association of Realtors is predicting a brighter future for the state's housing market in 2025. According to their annual lookahead, home sales are expected to increase by 10.5% compared to the projected 2024 total and 6.8% higher than 2023. This would put California's home sales at around 304,400, up from the current projection of 275,400.

    Home prices will likely continue their upward trend, with a forecasted median price of $909,400 in 2025, representing a 4.6% increase from the previous year. The median price is expected to be $869,500 in 2024 and was $814,000 in 2023.

    The persistent housing shortage in California will continue to drive up prices, which are already significantly higher than the national average of $416,700. However, a 10% improvement in housing supply due to declining interest rates may help alleviate some pressure on affordability.

    C.A.R.'s Chief Economist Jordan Levine notes that while price growth is expected to be slower, the housing shortage will keep the market competitive, leading to continued price increases. The recent drop in mortgage rates has also helped with affordability, with the typical monthly housing payment in San Jose falling by over $2,000 from its springtime peak.