Like many parts of the country, California’s housing market has historically grappled with low inventory levels, a situation exacerbated in recent years due to various economic and demographic factors.
This guide will go over California’s housing market inventory situation in 2026.
California’s housing inventory in 2026 has generally trended upward compared to recent years, though conditions vary widely by region.
Statewide active listings are up quite a bit year over year, marking a continued recovery from the ultra-low supply seen during the pandemic.
Months of supply has risen to about 3-4 months, the highest since 2019, but still below a balanced market. Buyers now have more choices and more negotiating power, especially in coastal metros where listings have increased the most.
Despite the gains, overall supply remains constrained, keeping much of California in a seller-leaning market.
As we delve deeper into 2026, this report will provide a comprehensive update on California’s evolving housing inventory landscape, offering insights and forecasts crucial for buyers and sellers.
Here’s an updated look at California’s housing market supply situation and how it might change in 2026.
According to Realtor.com’s 2026 housing market data, California’s housing inventory has continued to recover modestly after several years of extremely low supply.
Active listings across the state are up year over year, with inventory reaching its highest levels since the pre-pandemic period.
Despite this increase, supply remains constrained at about 146,000-153,000 active listings statewide, and California is still considered a tight but improving market.
Months of supply in many metros remains below balanced levels, though conditions vary significantly by region, with inland areas seeing more flexibility than coastal markets.
Overall, Realtor.com characterizes California as a transitioning market, moving toward balance, but still supply-limited in most high-demand regions.
Cities like Los Angeles, San Francisco, and San Diego, known for their historically competitive markets, are now showing signs of increased activity, with a greater variety of properties becoming available. This mainly benefits first-time buyers and those looking for more affordable housing options.
Additionally, suburban areas and smaller cities within the state contribute to this growth in California housing market inventory in 2026, offering alternative options for those seeking different lifestyles or lower housing costs.
The Realtor.com report mentioned above-provided data for total “active listings” and more recent “new listings.” When measured year-over-year, all major metropolitan areas in California experienced an increase in “new listings” (i.e., homes that came onto the market recently).
This trend could help improve California’s housing market inventory as we move further into the year.
The numbers below show the increase in new listings for California’s major metros over the past year:
It’s still a tight real estate market, but it’s improving.
Mortgage rates have played a significant role in California’s housing market inventory situation and elsewhere across the U.S.
Over the past few years, higher mortgage rates led to a decline in real estate market supply levels nationwide. That’s because many homeowners had significantly lower rates than the current averages, which made them reluctant to sell their homes and purchase another one.
But this so-called “lock-in” effect has eased over the past few months due to declining mortgage rates.
As of July 2026, the mortgage-buying corporation Freddie Mac reported that the average rate for a 30-year fixed home loan was steady at around 6.47%. That’s quite an improvement from the 7.79% peak in late October of 2023.
These and other factors have motivated sellers and brought more homes onto the market, improving California’s housing market inventory situation.
According to Danielle Hale, chief economist at Realtor.com
“We are optimistic that inventory levels are moving in a positive direction … Some sellers are motivated already, but other households may hold out for lower rates before selling or moving to new homes.”
Lower mortgage rates can make it easier to get approved for a mortgage in CA and make homebuying more affordable.
California’s housing market inventory in 2026 is showing signs of growth and improvement. This could benefit many home buyers across the Golden State later this year.
But challenges remain, and affordability tops the list.
A recent report from the California Association of Realtors showed that fewer than one in five home buyers in California (15%) could afford to purchase a median-priced home. That’s assuming a 20% down payment.
Mortgage rates and housing market inventory are two critical considerations for California home buyers in 2026. But they pale in comparison to the affordability challenges.
All of this underscores the importance of exploring your mortgage options. For example, the 15% affordability statistic mentioned above used a 20% down payment as part of the calculation.
But the truth is, most home buyers in California make smaller down payments than that. Eligible borrowers could put down as little as 3% on a conventional loan or 3.5% for an FHA loan.
If the Realtor group had used those lower down payment thresholds in their assessment, they would’ve ended up with a significantly higher affordability index.
Most home loan programs today allow borrowers to use gift money for their down payment and closing costs. So, while California is the most expensive state in the country for home buyers, there are still ways for buyers to succeed in 2026.
The key takeaway is that the California Housing Market Inventory in 2026 is expected to increase. This is good news for homebuyers wanting to buy a home in CA without fiercely competing with other buyers vying for the same properties.
If you’re looking to buy in California, we can help. At Sammamish Mortgage, we offer various mortgage options for you to choose from, and serve clients across California, Washington, Oregon, Idaho, and Colorado. Visit our website to get an instant rate quote or to use our mortgage calculator. Or call us today to get pre-approved for a mortgage!
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