California home sales drop 10% as prices dip. What’s next for real estate market?
The California housing market significantly cooled in January, with home sales and prices on the decline, according to the latest data from the California Association of Realtors.
In January, sales of existing single-family homes dipped by 10% in January to 254,110, down from 282,490 in December, the Realtors group said in its January home sales and price report.
Overall, that’s a 1.9% decrease over the past 12 months, according to the report, published Feb. 19.
The statewide median price of an existing single-family home declined by 2.6% in January to $838,850 from $861,020 in December.
However, housing costs were trending upward overall, the Realtor group said in a news release, noting that prices “continued to climb on a year-over-year basis for the 19th straight month.”
Meanwhile, pending home sales dropped by 6.4% year-to-year, the report said.
Here’s what you need to know about the state of California’s housing market and its future:
Why are California home sales decreasing?
Slowing home sales were “impacted by high mortgage rates and the devastating wildfires in Southern California,” California Association of Realtors president Heather Ozur said in the release.
The fires particularly devastated the housing markets in the cities of Altadena, La Cañada Flintridge, Pasadena, Sierra Madre and Topanga resulting in a nearly 70% cumulative statewide decline in weekly sales volume from the start of January, the Realtors group said.
The 30-year, fixed-mortgage interest rate averaged 6.96% in January, up from 6.64% in January 2024, according to data from federal finance company Freddie Mac’s weekly mortgage survey.
Higher interest rates mean that borrowing money to buy a home becomes more expensive, explained Marco Santarelli, founder of Southern California-based Norada Real Estate Investments.
“This can discourage potential buyers, leading to fewer sales,” Santarelli said. “Many potential buyers are sitting on the sidelines, hoping that rates will come down before they jump into the market.”
Which California regions saw home prices increase?
All five major regions in California experienced median home prices increase in January, compared to a year ago, the report said.
The Central Coast saw the biggest increase, with median home sales prices growing by 14.5% compared to January 2024, while Far North saw a 10.7% surge and Southern California rose by 7.7%.
The Central Valley experienced a 4.3% surge, and the San Francisco Bay Area had a 2.3% jump, the Realtors group said.
Are more properties on the market?
Those looking to buy a house in California have more properties to choose from, compared to a year ago, the California Association of Realtors said.
According to California’s Unsold Inventory Index, which measures the number of months needed to sell the supply of homes on the market, it would take 4.1 months for all available properties in the state to be bought.
That’s up from 2.7 months in December and 3.2 months in January 2024.
In California, homes were on the market for a median of 35 days before selling in January, the Realtors group said. That’s up from 32 days in January 2024.
Where are cheapest counties to buy a home in California?
In January, the most affordable housing in California can be found in the Far North, where the median sales price for a single-family home is $400,000, according to the California Association of Realtors’ report.
That’s up from $361,500 the previous January.
Here are five California counties where housing prices are well below the statewide average:
Lassen County
- Median sold price of existing single-family homes: $231,000
- Region: Far North
Siskiyou County
- Median sold price of existing single-family homes: $303,000
- Region: Far North
Glenn County
- Median sold price of existing single-family homes: $327,000
- Region: Central Valley
Tehama County
- Median sold price of existing single-family homes: $337,450
- Region: Far North
Lake County
- Median sold price of existing single-family homes: $340,000
- Region: Northern California
Which counties have the most expensive housing prices?
According to the Realtors group, California’s most expensive home prices can be found in the Bay Area.
In January, the median sale price for a single-family home in the Bay Area was $1.1 million.
The Central Coast had the second-highest home prices, with a median home sale price of about $1 million.
These five counties had the highest median sold prices for existing single-family homes in January:
San Mateo County
- Median sold price of existing single-family homes: $1.9 million
- Region: San Francisco Bay Area
Santa Clara County
- Median sold price of existing single-family homes: $1.8 million
- Region: San Francisco Bay Area
Marin County
- Median sold price of existing single-family homes: $1.3 million
- Region: San Francisco Bay Area
San Francisco County
- Median sold price of existing single-family homes: $1.4 million
- Region: San Francisco Bay Area
Alameda County
- Median sold price of existing single-family homes: $1.1 million
- Region: San Francisco Bay Area
What’s next for California real estate?
Home sales were expected to “remain soft” in February and March, Ozur said, adding that
“it is encouraging to see an uptick in new listings as the market gears up for the spring homebuying season.”
“The improvement in supply conditions will offer buyers more options to choose from and allow some demand to be fulfilled as competition heats up in coming months,” she said.
Favorable interest rates could also attract more buyers and sellers.
“Mortgage rates have been trending downward in the past four weeks since reaching their recent peak, which should help improve home sales moving forward,” the Realtors group said.
This story was originally published February 26, 2025 at 5:00 AM with the headline "California home sales drop 10% as prices dip. What’s next for real estate market?."
