The past few days have injected a dose of cautious optimism into the housing market. After a prolonged period of uncertainty, recent data suggests a potential shift, with California's real estate landscape showing signs of modest improvement. For buyers, sellers, and investors, understanding these mixed signals is key.
Let's break down the latest trends as of October 2025.
California Home Sales: A Modest Rebound
After five consecutive months of decline, California's existing home sales rebounded in September. Sales jumped 6.6% compared to September 2024, pushing year-to-date figures back into positive territory.
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What it means: The market is showing resilience. While activity is still below the 300,000-unit benchmark, this rebound is a positive sign after a sluggish period.
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Looking ahead: Pending sales data suggests we could see another small gain in October, indicating this momentum might continue through the end of the year.
Median Price: Stabilizing for the Second Month
The statewide median home price recorded its second straight annual gain, rising 1.8% from a year ago to $883,640. While prices typically dip from August to September, this year-over-year growth is encouraging.
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What it means: The market is finding its footing. Price growth in higher-end homes is helping to stabilize the overall median. At the county level, it's a mixed bag, with 27 counties seeing price gains and 24 seeing declines.
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Key Takeaway: Prices are stabilizing, not skyrocketing, which can be a relief for buyers feeling priced out.
Builder Confidence Surges
Builder sentiment saw a significant jump in October, reaching its highest level since April. The NAHB/Wells Fargo Housing Market Index (HMI) surged five points to 37.
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Why the optimism? Builders are encouraged by rebounding sales and lower mortgage rates. Their sales expectations for the next six months hit the highest point since January.
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A Note of Caution: Challenges remain. Supply costs are high, and 38% of builders reported cutting prices in October to boost demand.
Small Business Optimism Dips
Not all indicators are positive. The Small Business Optimism Index dipped below 100 in September, likely weighed down by economic uncertainty and the then-impending government shutdown.
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The Impact: Fewer business owners expect sales to increase, and concerns about inflation persist. This broader economic unease can indirectly affect the housing market by impacting consumer confidence.
The X-Factor: Mortgage Rates Near 3-Year Lows
This is arguably the biggest news for potential buyers. Due to trade tensions and government shutdown concerns, the average 30-year fixed mortgage rate has recently dropped, hovering around 6.22%—the lowest level in nearly three years.
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Why it matters: Low rates increase purchasing power. If they remain at this level or decline further, they could be the key motivator that brings waiting buyers off the sidelines.
The Bottom Line
The market is sending mixed but hopeful signals. Increased sales, stabilizing prices, and surging builder confidence are positive signs. However, they are balanced by economic uncertainty and cautious small business sentiment.
The current low mortgage rates present a significant opportunity. For buyers who have been waiting, this combination of slightly softer prices and much lower borrowing costs could be the window they've been looking for.
As we move into the final quarter of 2025, all eyes will be on upcoming economic reports and the trajectory of mortgage rates to see if this cautious optimism can turn into a sustained recovery.
Would you like more insights on how these trends could impact your real estate decisions? Let us know! To schedule a meeting, email us at [email protected]
For more insights and expert analysis on real estate trends, visit the California Association of REALTORS® (C.A.R.) at www.car.org
