Homeownership isn't getting any easier for Golden State residents
California housing affordability slipped in the second quarter of 2025, as higher home prices and elevated mortgage rates limited purchasing power, according to the California Association of Realtors (CAR).
Fifteen percent (15%) of California households could afford a median-priced existing single-family home, priced at $905,680, down from 17% in the first quarter of 2025 but up from 14% in the same quarter last year. CAR’s Traditional Housing Affordability Index (HAI) shows affordability remains near record lows. The figure is less than one-third of the index peak of 56% recorded in the second quarter of 2012.
A buyer needed an annual income of $232,400 to qualify for the purchase, with a monthly payment of $5,810 based on a 20% down payment and a 30-year fixed-rate mortgage at 6.90%. The effective interest rate declined slightly from 6.93% in the previous quarter and from 7.10% a year earlier.
The median price rose 6.9% from the prior quarter, partly due to seasonal factors, but fell year over year for the first time in eight quarters. C.A.R. noted that slower demand and increased supply have put downward pressure on prices, with further moderation expected in the coming months.
For condominiums and townhomes, 25% of households could afford the $670,000 median-priced unit, requiring an annual income of $172,000 to meet the $4,300 monthly payment. Affordability for this segment rose from 24% in the prior quarter and 22% a year earlier.
Nationally, 34% of households could afford a median-priced home of $429,400, with a required annual income of $110,400 for a $2,760 monthly payment. The national figure fell from 37% in the first quarter and rose from 34% a year earlier.
County-level data showed Lassen as the most affordable, with 46% of households able to purchase a median-priced home and a required income of $73,200. Mono was the least affordable, with only 8% of households meeting the threshold. San Mateo required the highest income at $564,800, followed by Santa Clara at $500,000-plus.
C.A.R. reported that affordability declined in 23 counties quarter over quarter, improved in 16, and was unchanged in 14. Compared with a year earlier, 41 counties saw gains, while 12 either fell or were flat. High borrowing costs continue to weigh on affordability in many areas.
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