The Golden State’s housing market showed some serious get-up-and-go in February 2025! According to the latest report from the California Association of REALTORS® (C.A.R.), we’re seeing a welcome rebound after a slower start to the year. Let’s dive into the key trends shaping the California real estate landscape.
Statewide Sales See Significant Surge:
The big news? California home sales are on the rise! February saw the highest level of existing, single-family home sales in over two years, reaching a seasonally adjusted annualized rate of 283,540. That’s a robust 11.6% jump from January and a solid 2.6% increase compared to February 2024. It seems like the market has shaken off some of the uncertainty that lingered at the beginning of the year.
Median Home Price Shows Modest Movement:
While sales are climbing, the statewide median home price saw a slight dip month-over-month. In February, the median price landed at $829,060, down 1.2% from January. However, looking at the bigger picture, prices are still up 2.8% from February of last year’s $806,480. This suggests a market that’s gaining momentum in terms of activity, but price appreciation is currently more moderate.
Regional Differences Paint a Varied Picture:
California’s diverse regions are experiencing the market in their own way:
- San Francisco Bay Area: This region led the pack with a 3.5% increase in sales compared to last year. However, it was the only major region to see a slight year-over-year median price decline of 0.5%. This could be attributed to stronger sales in more affordable parts of the Bay Area.
- Central Coast: Showing strong price growth, the Central Coast saw a significant 9.4% year-over-year increase in the median price, along with a modest 1.6% rise in sales.
- Central Valley: This more affordable region experienced a 3.5% increase in median price but a 3.5% decrease in sales compared to last February.
- Far North: The Far North saw a 1.8% uptick in median price but a 4.9% drop in sales year-over-year.
- Southern California: Overall, Southern California saw a 4.8% year-over-year increase in median pricebut a 3.0% decrease in sales. Within SoCal, Orange County stood out with strong price gains and flat sales, while other counties had their own unique dynamics.
Inventory Levels on the Rise:
Good news for buyers! The Unsold Inventory Index (UII), which measures how long it would take to sell all current listings at the current sales pace, increased from 2.9 months in February 2024 to 4.0 months in February 2025. This marks the 13th consecutive month of annual gains in housing supply, offering more choices for those looking to purchase.
Time on Market Slightly Longer:
Homes are taking a bit longer to sell compared to last year. The median number of days to sell a California single-family home was 26 days in February, up from 22 days in February 2024. This could be a reflection of the increased inventory and buyers having more options to consider.
What’s Driving These Trends?
C.A.R. points to declining mortgage rates at the start of the year as a key factor in the rebound in sales. Lower borrowing costs likely brought buyers back into the market who were previously sidelined by affordability challenges. The increase in available inventory is also easing some of the competitive pressures seen in recent years.
However, it’s worth noting that pending sales dipped slightly compared to last year for the third consecutive month. This could be due to a subsequent jump in mortgage rates in early February and ongoing economic uncertainties potentially impacting buyer confidence.
Looking Ahead:
Experts anticipate that mortgage rates will likely remain volatile in the near term, which could lead to fluctuations in pending sales. However, with rates expected to stabilize later in the year and the continued increase in inventory, the California housing market is poised for continued improvement through the spring and summer homebuying seasons.
The Takeaway for California:
February 2025 marks an encouraging shift in the California housing market. Increased buyer activity, more available homes, and the initial moderation of mortgage rates have contributed to a significant boost in sales. While price appreciation is currently moderate and regional differences persist, the overall trend suggests a market that is finding its footing and heading into the prime buying season with renewed energy.
Whether you’re a buyer, seller, or simply keeping an eye on the market, these trends provide valuable insights into the current state of California real estate. Stay informed and connected with your local real estate professionals for the most up-to-date information in your specific area.
