A dip in mortgage rates and slightly lower prices coupled with an increase in listings in December delivered a much-appreciated gift for a housing market that has been struggling for the past two years.
A seasonally adjusted annualized rate of 288,200 homes sold in December, a 0.3% increase compared to November – and up 2% from a year ago, according to the California Association of Realtors. (If annualized figures give you a headache, just think that about 24,000 homes sold in December.)
It’s the most home sales in more than three years, but below the all-important 300,000 threshold for the 39th-straight month.
All seven regions reported annual sales gains, including a 23.5% increase in the Far North, from Chico to Crescent City. Southern California had the smallest increase at 1.7%.
“California’s housing market closed out 2025 on solid footing, with both home sales and available inventory improving over the prior year,” said CAR president Tamara Suminski, a Southern California broker. “As price growth eased toward the end of the year and mortgage rates fell to near three-year lows, the stage is set for a more optimistic 2026. We expect increased opportunities for buyers and a healthier, more balanced market in the months ahead.”
LARGEST ANNUAL DECLINE IN HOME PRICES SINCE JUNE 2023
While affordability is a concern for many wanna-be buyers – fewer than one of every five households could buy the median-priced home during the third quarter – lower mortgage rates and prices have helped in recent weeks, trimming costs by as much as 10%, said Mike Simonsen, chief economist for Compass.
The state’s median-home price – meaning half the homes sold for more, the other half for less – dipped to $850,680, a 0.4% drop compared to November and off 1.2% from a year ago.
December was the second year-over-year drop in three months, and the largest annual decline in since June 2023.
The Far North, again the best-selling market, had the largest one-year increase at 2.8%.
“Housing affordability showed some improvement in the fourth quarter, and the combination of lower mortgage rates and a growing supply of homes should encourage more prospective buyers to enter the market this year,” said CAR chief economist Jordan Levine. “While some policy uncertainty remains as we look ahead to the next 12 months, our outlook calls for modest economic growth and continued progress for the housing market in 2026.”
Home prices and sales in December compared to a year ago
| Region | Median home price | % gain or loss vs. a year ago | Home sales vs. a year ago |
|---|---|---|---|
| California | $850,680 | -1.2% | +2.0% |
| Bay Area | $1.2 million | No change | +2.0% |
| Central Coast | $997,000 | +0.2% | +12.8% |
| Central Valley | $485,000 | -1.4% | +5.5% |
| Far North | $380,000 | +2.8% | +23.5% |
| Inland Empire | $600,050 | +0.9% | +4.0% |
| Los Angeles | $807,540 | -1.0% | +2.2% |
| Southern California | $855,000 | +0.6 | +1.7% |
Source: California Association of Realtors
