May 25, 2026 – California’s housing market showed encouraging signs of improvement in the latest report, with sales rebounding, prices growing only moderately, and affordability inching forward as average mortgage payment dipped. News on the Middle East conflict moving closer to a resolution could ease some of the recent pressure on rates and provide additional support for buyers. Still, the recovery faces meaningful headwinds: tight supply is likely to persist as single-family construction slows, insurance costs will continue to rise, and while affordability is improving, progress remains gradual and uneven across the state.

California home sales bounce back after three straight months of decline: Home sales in California had their first year-over-year gain for 2026 in April, and the annual increase was also the largest in seven months. Existing single-family homes at the state level climbed 3.9% from March and increased 4.1% from the same month of last year. April’s jump from a year ago was the biggest since last September but the level of sales last month remained below the 300k benchmark. The increase in April was large enough to erase the cumulative loss in sales in the prior three months, and the year-to-date sales were essentially flat compared to their year-ago level. Sales were up in most price segments, but properties priced at $2M and up experienced the largest growth pace from their year-ago level. Stock market indices setting new record highs might have contributed to the bounce back in sales activity in the high-end market segment, but a pullback in mortgage rates in the first half of April also motivated some buyers to close their deals last month.

Home prices climb again in April and reach a new record high: The statewide median home price rose moderately from March to April and set a new record high despite registering a soft year-over-year gain last month. California’s median price increased 2.9% from March, and the growth pace perfectly matched the historical average observed between March and April in the past 30 years. April’s price gain of 0.4% from a year ago was the third straight month of increase since the back-to-back dip in January, and the nudge from the year-ago level was enough to push the median price passed the $900k benchmark for the first time since May 2025. April’s median price of $914,810 is also the new peak for existing single-family homes sold in California. A change in the mix-of-sales that skews towards higher priced properties was the primary reason for the median price to reach a new record. With the share of million-dollar home sales climbing to the highest level on record, the bump-up in price last month was due to more sales activity in high-end markets rather than a surge in property values.  

Fair Plan hikes rates by 30 percent this fall: The California Fair Plan’s premiums will rise by nearly 30% overall starting in October, and the increase in insurance bills will put more burden on families who are already struggling with rising housing costs. The hike will be the first increase since 2023 when Fair Plan raised premiums by an average of 15.7%, but it will also be the largest rate hike in years. While the exact change in premium varies depending on the specificity of the properties insured, nearly half of all policyholders will see an increase between 30% to 50%. The surge in the average premium is driven largely by the wildfire portion of policyholders, as their properties are subject to more significant wildfire risks and will see higher increases in premium. The Fair Plan – an insurance pool created by the state of California for homeowners who cannot find insurance in the private market – covers about 663k residential policyholders and has doubled its policy counts since its last rate increase. With the insurance program currently holding an estimated 6% to 7% of the state’s market share, the sharp increase in premium this fall will create new housing affordability obstacles for many homeowners in the next two years.

New metric indicates a mismatch between prices of for-sale properties and buyers’ income: The National Association of REALTORS® (NAR) and Realtor.com introduced a new Listing‑Income Alignment Score, a metric that measures how closely the distribution of home listings matches the income distribution of local households. A score of 100% indicates a balanced market, while lower scores reflect a concentration of listings at higher price points. Nationally, the score reached 74.9% in March 2026—an improvement from the recent bottom of 57.4% reached in March 2023 —but still below the pre‑pandemic level of 84.4%. The new indicator highlights a persistent affordability gap: middle‑income households can access only about 23% of listings versus 44% in a balanced market. The imbalance was particularly obvious in California as three of the top five metros with the most constrained markets – Los Angeles (39.4%), San Diego (45%), and Oxnard (46.8%) – are in the Golden State. With mortgage rates falling below their year-ago levels, the NAR metric indicates that nearly all major markets improved over the past year. Slow progress, however, will continue in the near term as the Middle East conflict continues to put upward pressure on rates. 

Single-family housing permits fell to lowest level in eight months: Total housing starts at the national level slipped month-over-month at the beginning of the second quarter, falling 2.8% in April to a seasonally adjusted annual rate of 1.465M from March’s 1.507M. On a year-over-year basis, housing starts increased 4.6% due primarily to a 23.3% jump in multifamily starts. Single-family starts, on the other hand, were down 2.4% year-over-year as economic uncertainty and affordability pressures remained. Permitting activity also weakened from last year, as single-family permits dropped 5.5% year-over-year, while multifamily permits increased 9.2% compared to the year-ago level. With building material costs not likely to come down soon, and mortgage rates remaining elevated, homebuilders could face more headwinds in the near term and may pull back further in the coming months. 

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