California’s 2025 Housing Market Forecast: Sales and Prices to Rise

January 6, 2025 0 Comment Category: Uncategorized

The California Association of REALTORS® (C.A.R.) projects a 10.5% increase in home sales and a 4.6% rise in median home prices in 2025. Lower mortgage rates and improved housing supply will encourage more buyers and sellers to enter the market, driving increased activity.

Key Market Predictions for 2025

Home Sales: Expected to reach 304,400, up from 275,400 in 2024.
Median Home Price: Forecasted to rise 4.6% to $909,400.
Mortgage Rates: Expected to decline from 6.6% in 2024 to 5.9% in 2025.
Housing Affordability: Predicted to hold at 16%, as home prices and wages remain closely aligned.

A combination of lower borrowing costs and increased inventory will create more opportunities for buyers, though demand is expected to keep home prices rising.

Impact on Buyers and Sellers

For Buyers: Lower mortgage rates may ease financing costs, but rising home prices and competition will require swift decision-making.
For Sellers: More homeowners may list properties as the “lock-in effect” weakens, increasing available inventory.

While supply conditions will improve, housing remains scarce by historical standards, keeping demand strong.

What to Expect Moving Forward

C.A.R. forecasts a more active and competitive market in 2025, shaped by declining interest rates and steady price growth. Buyers and sellers should prepare for shifting conditions and act strategically.

For legal guidance on real estate transactions, property management, and California housing laws, contact Davidovich Stone Law Group, LLP.

LATEST IN THE LAW