Housing sales and prices are projected to increase in 2026, according to a new California housing market forecast. Image courtesy PhotoSpin.
2026 forecast at a glance
Single-family home sales are forecast to total 274,400 units in 2026, an increase of 2% from 2025’s projected sales pace of 269,000.
California’s median home price is forecast to rise 3.6% to $905,000 in 2026.
Housing affordability is expected to inch up to 18%.
The average 30-year fixed mortgage rate is anticipated to decline to 6% in 2026, down from 6.6% in 2025.
After a year of sluggish growth, California’s housing market is poised to regain a bit of momentum in 2026. Home sales and prices are projected to inch upward as mortgage rates decline and buyer confidence begins to rebound, according to a new forecast released by the California Association of Realtors.
The 2026 California Housing Market Forecast projects single-family home sales to climb 2% next year, reaching 274,400 units — up from the estimated 269,000 homes sold in 2025. While the increase is modest, it marks a turnaround from the flat activity seen over the past two years.
At the same time, the state’s median home price is expected to rise 3.6% to a record $905,000, following smaller gains of 1% this year and less than 1% in 2024. C.A.R. analysts say softening prices and declining mortgage rates are beginning to draw more buyers back into the market.
“Home prices in California are expected to rise in 2026, but the growth pace will remain mild compared to what we’ve seen in past years,” said C.A.R. President Heather Ozur. “For would-be buyers who sat out the competitive market during the pandemic, next year could offer more opportunities as inventory increases and lending conditions become more favorable.”
Housing affordability expected to improve
C.A.R. projects housing affordability — the share of households able to purchase a median-priced home — to improve slightly, rising to 18% in 2026 from a projected 17% in 2025. While still historically low, the improvement reflects gradual relief from high borrowing costs that have kept many Californians sidelined.
Economic conditions are also expected to shift in ways that support a mild recovery. The association’s forecast anticipates a decline in the average 30-year fixed mortgage rate to 6% in 2026, down from 6.6% in 2025. Although still higher than pre-pandemic levels, the easing of rates could help unlock more housing supply, with active listings projected to rise about 10%.
National and global trends, however, could complicate the picture, according to C.A.R. Chief Economist Jordan Levine.
“As economic uncertainty begins to clear up in the next 12 months and mortgage rates start declining more consistently in the upcoming quarters, housing sentiment will see some improvement in 2026,” Levine said. “However, mounting headwinds such as the ongoing trade tensions between the U.S. and its trading partners, the home insurance crisis, and a potential stock market bubble will remain challenges for the housing market in the upcoming year.”
C.A.R. expects California’s job growth to slow to 0.3% next year, with the unemployment rate ticking up to 5.8%. The association also projects inflation to edge up slightly to 3% in 2026, after dipping to 2.8% in 2025.
Taken together, the data suggest a housing market that’s steadying after years of volatility — neither booming nor busting, but slowly finding its footing.
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