Conflict-driven rate jitters kept California's spring housing market stuck in low gear
California’s housing market stayed muted in March as the war in Iran, rising energy costs and renewed financial-market volatility pushed mortgage rates higher and kept would‑be buyers cautious.
New figures from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) revealed that existing single‑family home sales fell to an annualized 265,320, down 3.5% from February and 2.5% from a year earlier.
Median home price rose 7.1% month over month to $889,190 and was 0.4% above March 2025.
March’s total marked the 42nd straight month that sales stayed below the 300,000 annualized benchmark. C.A.R. said year‑to‑date statewide home sales were down 1.3%.
Buyers, sellers stayed sidelined despite easing rates
“March home sales were subdued, as higher mortgage rates and stock market volatility kept many buyers on the sidelines,” said C.A.R. president Tamara Suminski.
“As both geopolitical tension and interest rates ease for the third straight week, buyers and sellers who have been taking a wait‑and‑see strategy could return to the market if the conflict in the Middle East continues to stabilize,” she said.
“The number of homes listed on the market remains low compared to last year’s levels even as the spring homebuying season kicks into its highest gear,” said Jordan Levine, C.A.R. senior vice president and chief economist.
“Many homeowners locked in historically low mortgage rates are now reluctant to sell, limiting available inventory. While easing rates are bringing some buyers back to the market, California’s persistent housing shortage remains. This supply/demand imbalance will likely cap sales in the coming months, even as affordability improves modestly,” he said.
C.A.R. reported that all five major regions posted year‑over‑year sales gains on a non‑seasonally adjusted basis, helped by an extra business day, with the Far North and Central Coast seeing the strongest increases.
Inventory tightened heading into the peak season, with the statewide Unsold Inventory Index down 17.5% from February and 5.7% from March 2025, even as active listings rose in nearly half of counties.
The median days on market ticked up to 23 from 22 a year earlier, while the sales‑to‑list‑price ratio held at 100%.
Geopolitics, inflation fears and a fragile recovery
C.A.R. said the average 30‑year fixed mortgage rate was 6.15% in March, down from 6.65% a year earlier but higher than 6.05% in February. That still left California exposed to the same conflict‑driven volatility that recently pushed national averages back above 6% and briefly to around 6.5%.
Industry analysts warned that the Iran war’s impact on oil prices and inflation expectations repeatedly knocked the housing recovery off balance this spring, even in high‑demand markets.
“The spring selling season is immensely impacted for three reasons: higher interest rates due to inflationary pressure, consumer economic uncertainty due to higher prices, worry about the economy and lower stock prices, and business uncertainty,” said Glen Weinberg of Fairview Lending in a recent interview with Mortgage Professional America.
“For the mortgage market, the bigger issue is not the initial oil spike, but whether higher energy prices become embedded in the broader inflation outlook,” said another analyst, Chris Williamson, in a separate MPA market update.
C.A.R. projects that prices will continue to climb as the spring season unfolds, but said lingering concerns about the conflict and the risk of higher inflation may restrain future gains.
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