Home Sales Stagnant, Prices Decline
In the first half of 2025, California’s housing market showed little growth, with home sales nearly flat compared to last year. While June saw a slight 4% monthly increase, sales were still 0.3% lower than June 2024—marking the third straight year-over-year decline.
Pending sales (homes under contract but not yet sold) dropped for the seventh month in a row, signaling weak demand. Rising mortgage rates are likely to keep the market sluggish in July.
Meanwhile, the statewide median home price dipped below $900,000 for the first time in three months, falling 0.1% from May and 0.1% from last year. This decline goes against the typical seasonal trend, suggesting that high mortgage rates and economic uncertainty are cooling buyer interest. Experts believe home prices may have already peaked for the year.
Construction Activity Mixed
Housing construction rebounded slightly in June after hitting a five-year low, but single-family homebuilding dropped to an 11-month low. Multifamily projects (like apartments) surged, but single-family permits fell in most regions, including the West (-6.1%), Midwest (-3.2%), and South (-3.2%). With tariffs increasing costs and buyers hesitant, construction is expected to remain slow.
Inflation Picks Up, Retail Sales Rebound
Consumer prices rose in June at the fastest pace since January, partly due to tariffs pushing up costs for items like clothing and furniture. The Consumer Price Index (CPI) increased 0.3% from May and 2.7% from last year—the highest yearly jump in four months.
Despite inflation, retail sales bounced back in June (+0.6%), boosted by spending on cars, dining out, and other goods. However, when adjusted for inflation, real spending growth was the slowest since August 2024.
What’s Next?
With inflation still a concern, the Federal Reserve is unlikely to cut interest rates at its July meeting. Higher tariffs (possibly coming in August) could further drive up prices, affecting both consumers and the housing market.
Bottom Line: California’s housing market is cooling, inflation is rising, and economic uncertainty persists. Buyers and sellers should brace for a slower market in the coming months.
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For more insights and expert analysis on real estate trends, visit the California Association of REALTORS® (C.A.R.) at www.car.org.
