- Home Sales Increase: Existing single-family home sales are projected to rise 10.5% in 2025, reaching 304,400 units (up from 275,400 in 2024).
- Median Home Price Growth: The California median home price is forecast to climb 4.6% to $909,400 in 2025, following a 6.8% rise to $869,500 in 2024.
- Housing Shortage: A persistent housing shortage will continue to drive up prices, keeping the market competitive.
- Lower Mortgage Rates: The average 30-year fixed mortgage rate is expected to decline to 5.9% in 2025 from 6.6% in 2024, easing borrowing costs for buyers.
- Improved Inventory: Housing supply will increase slightly above 10%, though it will still remain below historical norms.
- GDP and Job Growth Slowdown: The U.S. GDP is expected to slow to 1.1% in 2025, with California’s nonfarm job growth slowing to 1.1% and unemployment ticking up to 5.6%.
- Inflation Moderates: Inflation will ease to 2.0% in 2025, down from 2.9% in 2024.
Pull Quotes for Quick Read:
- “Demand will grow, especially with the lowest interest rates in over two years, benefiting first-time buyers.” — Melanie Barker, C.A.R. President
- “Price growth is expected to be slower, but the housing shortage will keep the market competitive.” — Jordan Levine, C.A.R. Chief Economist
- “A persistent housing shortage and competitive market conditions will continue to drive home prices upward next year.”
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