California home sales hit six-month high in June, but affordability and global uncertainty cloud outlook

California’s hard-hit housing market got on “firmer footing” in June, as sales rebounded for the third straight month and prices fell from a record high.

But affordability, higher mortgage rates and economic uncertainty with the ongoing crisis in the Middle East could become challenges during the next few months, housing experts say.

A seasonally adjusted annualized rate of 279,880 homes sold in June, a 4.1% increase from a month earlier – and up 6% a year ago, the largest year-over-year gain since September 2025, according to the California Association of Realtors. And first-half sales increased 1.9% compared to the first six months in 2025 (see table, below).

Best sales in six months

Better, not great. Adjusted annualized sales remained below the 300,000 threshold – considered the minimum sales for a healthy market – for the 45^th consecutive month.

All seven regions reported sales gains compared to a year ago, with 23% in the Far North – from about Chico to Eureka and 14% in the Central Valley leading the way. Great news for homeowners looking to sell, especially after a roller coaster-like ride over the past few years.

“California’s housing market ended the first half of the year on stronger footing, with home sales reaching their highest level in six months despite elevated mortgage rates and ongoing affordability challenges,” said CAR president Tamara Suminski. “As more buyers adjust to current market conditions and inventory of homes for sale continues to improve, we are encouraged that increased consumer confidence could support housing demand through the remainder of 2026.”

Prices down from record high a month earlier

Affordability is the biggest concerns for home-shoppers, as fewer than one of every four households can afford to buy – and the figure drops in several housing markets, such as the Central Coast and Orange County, according to the CAR.

But prices dropped in June from a record-high in May, largely because for the first time in several months entry-level and move-up sales outpaced million-dollar-plus transactions, which have greatly skewed prices.

The median-home price – meaning half the homes sold for more, the other half for less – dipped to $904,640, a 2.8% drop from May but up 0.4% from a year ago. 

The Central Coast, from Santa Barbara to Santa Cruz, had the greatest annual percentage increase at 6.9%, with only the Inland Empire reporting a drop in prices at 0.7%.

The Bay Area, as always, had the highest median price at $1.1 million, with San Mateo County leading the way at $2.3 million, followed by San Francisco at $2.1 million.

Housing leaders are optimistic that the June boom, albeit modest, could signal a healthier market.

“June’s rebound in housing demand helped the market close the second quarter on firmer footing with the broad-based increase in sales suggesting that home buyers are beginning to adapt to the current interest rate environment,” said CAR chief economist Jordan Levine. “However, the recent escalation of conflict in the Middle East has added renewed upward pressure on mortgage rates, which could weigh on affordability and create additional headwinds for housing demand as the summer buying season unfolds.”