C.A.R. data show statewide transactions below 300,000 units for 48 straight months as borrowing costs surge
California’s housing market posted its sharpest annual sales decline in recent months, with existing single-family home transactions falling 6.5% year over year to a seasonally adjusted annualized rate of 260,410 units in September, the California Association of Realtors (C.A.R.) reported.
The September total also fell 3.4% from August’s 269,620 units as surging borrowing costs and a persistently constrained affordability environment continued to sideline buyers across the state.
The figure extended a streak with few bright spots. Statewide sales have now remained below the 300,000-unit benchmark for 48 consecutive months.
Read more: Florida home sales dip as mortgage rate pressure mounts in Q3
Rates climb as buyer urgency fades
The 30-year fixed-rate mortgage averaged 6.86% in September, up from 6.67% in August and 51 basis points above the 6.35% average recorded in September 2025, according to C.A.R.’s calculations based on Freddie Mac’s Primary Mortgage Market Survey data.
The spike, which gained momentum from late August, has widened the qualifying gap for buyers at both the entry and move-up levels.
“Mortgage rates and affordability remain challenging, but with competition easing, well-prepared buyers may have more room to explore their options, negotiate and focus on finding the right home rather than simply hurrying to make an offer,” said Tamara Suminski, C.A.R. president and a Southern California broker and Realtor.
Joel Kan of the Mortgage Bankers Association says new home purchase applications fell to their lowest level in six years as rising borrowing costs weighed on buyers, particularly first-time purchasers relying on FHA financing. https://t.co/Pf7V8lz8zm
— Mortgage Professional America Magazine (@MPAMagazineUS) October 15, 2026
California’s statewide median home price edged down 0.2% from August to $899,720, a smaller monthly decline than the 1.8% historical average between those two months.
Year over year, the median rose 1.7% from $884,390 in September 2025, marking the fifth consecutive month of annual price gains.
Million-dollar transactions accounted for 35.9% of total sales, up from 35.2% the prior month, keeping the median elevated by shifting the composition of closed deals toward higher-priced homes.
As brokers familiar with California housing affordability trends and elevated rate pressure will recognize, constrained supply is acting as a price floor even as volumes soften.
Supply improves on slower sales, not new listings
Inventory nudged higher in September, with total active listings rising 2.7% from August and gaining 0.5% year over year, the first annual increase in eight months.
The Unsold Inventory Index held at 3.7 months, flat with August and slightly above the 3.6 months recorded a year earlier.
C.A.R. attributed the gain primarily to slower sales activity rather than a meaningful influx of new supply, with the mortgage rate lock-in effect keeping potential sellers anchored to their existing loans.
“September’s decline in pending sales suggests that California could see further softening in closed transactions in the coming months,” said Jordan Levine, C.A.R. senior vice president and chief economist.
“On the supply side, the mortgage rate lock-in effect continues to constrain new listings, while limited inventory is helping to cushion home prices against weaker demand. These competing forces suggest that slower sales may not translate into a comparable decline in prices in the near term.”
Southern California posted the steepest annual sales decline among the state’s five major regions at 9.1%, followed by the Far North at 9.0%.
The Central Coast was the only region to record a year-over-year gain, rising 4.4%.
Year-to-date statewide sales remained up 0.8% through September, though with California’s housing market forecast to deliver only a modest rebound in 2026, the fourth quarter looks set to test the resolve of the state’s mortgage professionals.
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