California’s housing market showed tentative signs of life in September, according to the California Association of Realtors (CAR), but experts warn that the improvements remain fragile in an economy still weighed down by broader policy and political challenges.
Statewide, sales of existing single-family homes rebounded 6.6% from a revised 260,340-unit pace in September 2024, marking the first positive year-over-year movement after five consecutive months of declines. The statewide median home price rose for a second straight month to $883,640, a 1.8% gain from a year earlier, though it slipped 1.7% from August. These modest gains come amid mortgage rates hovering near their lowest levels in nearly three years, at around 6.2%, providing limited relief to buyers.
“Price growth in the upper segments appears to be stronger than the more affordable range, which may have provided some upward support to the overall median price growth,” the CAR report noted, underscoring the uneven nature of the recovery. Only 27 of the state’s 53 counties posted year-over-year gains, while 24 counties saw prices drop from 12 months ago. Pending sales in September edged 0.1% above last year’s pace, signaling that buyers remain cautious.
Small businesses, meanwhile, continue to feel the drag of political uncertainty. The NFIB Small Business Optimism Index fell below the 100 benchmark in September to 98.8, with the uncertainty index surging seven points to 100, the fourth highest in over 50 years. A net 31% of small business owners plan to raise prices in the coming months, up five points from August, while fewer expect higher sales in the next quarter.
The National Association of Home Builders/Wells Fargo Housing Market Index rose five points in October to 37, the highest reading since April. Sales expectations for the next six months jumped nine points to 54, while traffic of prospective buyers increased four points to 25. Yet even with these improvements, more than a third of builders reported cutting prices in October, with average reductions reaching 6%, reflecting persistent supply-side cost pressures.
Much of the economic unease is linked to the ongoing federal government shutdown, which has disrupted reporting and amplified uncertainty across markets. Mortgage rates, which had trended downward in response to trade tensions with China and the shutdown, remain a double-edged sword: while low rates could encourage buyers to return, the overall economic environment dampens confidence.
Economists caution that while September’s rebound may seem encouraging, it represents a worn, frayed lifeline rather than a robust recovery. “Home sales may inch up in Q4, but statewide sales for the year will likely remain flat,” the CAR report concluded.
For California, these incremental gains illustrate the challenges of a market still reeling from a year of economic headwinds. Modest improvements may lift spirits, but the broader picture shows a housing economy—and a wider economic landscape—still far from the stability of previous years.