After several years of ups, downs and high mortgage rates, the California housing market is finally showing signs of stability. According to the California Association of REALTORS® (C.A.R.), 2026 could bring modest improvements in both home sales and affordability, giving long-waiting buyers and sellers a bit of hope.
🏡 Home Sales Expected to Rise Slightly
C.A.R. projects that existing single-family home sales will climb 2% in 2026, reaching around 274,400 units, up from the expected 269,000 in 2025. That might not sound like much, but after a sluggish 2025, it signals that the market could finally be turning a corner.
Lower mortgage rates and a more balanced market are expected to bring more buyers off the sidelines — and encourage sellers who’ve been waiting for better conditions to list their homes.
💰 Home Prices to Hit a Record $905,000
California’s median home price is forecast to increase 3.6% to $905,000 in 2026. That follows a smaller 1% rise in 2025 to $873,900, up slightly from $865,400 in 2024.
While home prices continue to rise, the pace of growth is slowing compared to the double-digit spikes seen earlier in the decade. The combination of slightly lower interest rates and stabilizing prices could help bring more balance to the market.
“Home prices in California are expected to rise in 2026, but the growth pace will remain mild when compared to past years,” said C.A.R. President Heather Ozur. “For would-be buyers who sat out the competitive market during the past couple of years, that means more opportunities as inventory increases and lending conditions improve.”
📉 Mortgage Rates and Affordability Improving
Good news for buyers: mortgage rates are expected to dip to 6.0% in 2026, down from 6.6% in 2025 and 6.7% in 2024. While still higher than pre-pandemic lows, these rates could make a noticeable difference in monthly payments.
As a result, the housing affordability index — the percentage of California households able to afford a median-priced home — is projected to inch up to 18% in 2026, compared with 17% in 2025 and 16% in 2024. In other words, slightly more families will be able to buy homes.
📈 Economic Factors to Watch
The broader economy will play a key role in shaping the 2026 housing market. C.A.R. forecasts:
- U.S. GDP growth slowing to 1%
- California job growth easing to 0.3%
- Unemployment ticking up to 5.8%
- Inflation (CPI) averaging 3.0%
Even with these headwinds, C.A.R. expects housing supply to improve, with active listings up nearly 10%, helping buyers find more options and reducing competition.
⚠️ Challenges Ahead
Despite the more positive outlook, several risks could weigh on the market — including trade tensions, the home insurance crisis, and potential volatility in the stock market. These factors could affect buyer confidence and economic growth heading into 2026.
🏠 The Bottom Line
The 2026 California housing market looks cautiously optimistic. Home prices and sales are both expected to inch up, mortgage rates are forecast to ease, and affordability should improve — even if only slightly.
For buyers, it could be the right time to re-enter the market after years of waiting. For sellers, stabilizing prices and renewed demand could make 2026 a stronger year to list.
At a Glance: California Housing Forecast
| Year | Home Sales (000s) | Median Price | Affordability | 30-Year FRM |
| 2024 | 269.2 | $865,400 | 16% | 6.7% |
| 2025* | 269.0 | $873,900 | 17% | 6.6% |
| 2026** | 274.4 | $905,000 | 18% | 6.0% |
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Resources: https://www.car.org/aboutus/mediacenter/newsreleases/2025releases/2026forecast
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