No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.
In a previous article, we speculated on the possibility that California’s home-price downturn might end. Now, a report has come out forecasting modest improvements, with home sales expected to rise slightly and prices to appreciate moderately as mortgage rates soften and housing affordability improves.
A new report from the California Association of Realtors predicts that home sales and prices will rise in 2026. So, let’s look at these two “upturn” predictions for the California real estate market in 2026.
Recently, the California Association of REALTORS (C.A.R.) offered their latest outlook with two optimistic housing market predictions for 2026. The industry group expects to see an increase in home sales and prices in the California housing market next year.
Here are three of the critical predictions contained in this latest California housing market forecast for 2026:
Overall, the group suggests that the California real estate market could become more active over the coming months, with increased sales and buyer competition.
Housing market predictions are the equivalent of an educated guess. We should view them with an open mind and some healthy skepticism.
In this report, C.A.R.’s research team analyzed current trends within the real estate market to offer some data-based predictions about where we might be headed in 2026. So there’s a good chance these California housing market predictions could hit the mark or at least come close.
If they do pan out, it would signify a turning point for the housing market in California that could affect home buyers all across the state.
Here are three ways these anticipated trends could affect home buyers in 2026:
As mentioned above, the median home price in California declined slightly over the past year or so. The same is true for most other states across the country.
But steadily rising house prices in 2026 are expected. This could create a renewed sense of urgency among home buyers in California, especially those planning to purchase in 2026.
Like much of the country, the California real estate market grapples with a persistent inventory shortage. This means there need to be more homes listed for sale to meet the demand from buyers.
One of C.A.R.’s offered some good news on this front. Their researchers expect a moderate increase in the number of homes for sale over the next year.
At first glance, inventory growth of around 15% might seem small. But the truth is, any supply gains would be welcomed at this point. It would give California home buyers more properties to choose from and a greater chance of success while increasing overall sales volume.
The group predicted that California’s total number of home sales would increase significantly in 2026. The market could also accelerate with an overall faster pace of sales. And there’s evidence to suggest this is happening already.
Since the start of this year, the average number of “days on the market” for real estate listings in California has declined sharply. In short, this means homes are selling faster today than at the start of the year. This usually indicates an increase in buyer activity as well.
California home buyers should keep a close eye on this trend as well. It could affect everything from your negotiating ability to the price you pay for a home.
The recent C.A.R report on the real estate market outlook for 2026 in California also outlines a couple of other interesting points:
In addition to the recent C.A.R. report, it’s worth discussing what mortgage interest rates may do next year, as rates directly impact the overall cost of buying a house in California.
Currently, mortgage rates are very high in California and throughout the US. According to the most recent data from Freddie Mac, the rate for a 30-year fixed-rate mortgage is currently 6.09%. Rates are relatively high, making it increasingly more difficult for buyers to get approved for a mortgage. However, the rate today is roughly 1.0% lower compared to the same time year.
Experts anticipate rates gradually decreasing throughout the remainder of 2026 as the economy remains sluggish. MBA analysts expect mortgage interest rates to dip to 6% or even lower by the fourth quarter of 2026.
That means home buyers in California may soon be able to lock in at much lower rates than we’ve currently seen. Even if home prices increase, lower rates will make it easier to qualify for a mortgage and give them more incentive to buy a home in 2026. Lower rates will also incentivize homeowners in California to refinance their mortgages to save money on their home loans.
More housing inventory and lower mortgage rates mean the housing market in 2026 is expected to be more favorable for buyers regarding housing availability and affordability.
The economy’s overall health plays a vital role in the value of real estate, typically measured by economic indicators, including the gross domestic product (GDP). Generally speaking, when the economy is slow, so is the housing market.
Experts anticipates the GDP to increase by 2.2% in 2026. California’s unemployment rate is expected to remain stagnant in 2026. Although there is some job growth in the state, it’s not enough to balance the rising number of people looking for work.
Not only is the US GDP is predicted to rise, but so is the rate of inflation. During higher inflation, mortgage interest rates typically tend to increase, while the opposite is true..
All of these California housing market predictions for 2026 can be summed up with a single sentence. After a year-long cooling trend that has affected most of the country, the California housing market could ramp up again in 2026 due to increased demand from buyers.
If you’re looking to buy in California, we can help. At Sammamish Mortgage, we offer various mortgage options for you to choose from. Since 1992, we’ve been helping clients across Washington state, Idaho, Colorado, Oregon, and California. We are proud to offer a wide variety of mortgage programs and products with flexible qualification criteria, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans, among others. Visit our website to get an instant rate quote or to use our online mortgage calculator. Please contact us if you have any questions or are ready to get pre-approved for a mortgage.
Experts predict modest price growth of 2–4% with slightly increased inventory and stable sales compared with 2025.
Home prices are forecasted to rise moderately throughout 2026.
Yes, mortgage rates around 6% are expected to slow sales slightly but may stabilize prices.
Inventory has been increasing, with 4–5 months of supply statewide, moving toward a more balanced market.
The San Francisco Bay Area and parts of Los Angeles remain tighter than most other regions, with supply under 4 months.
Yes, sales are projected to grow modestly, as buyers take advantage of slightly lower rates and more listings.
Affordability will remain a challenge, but slight improvements are expected, allowing a small increase in buyer participation.
Yes, slower new construction in recent years keeps supply tight, contributing to price stability in high-demand areas.
Urban areas like LA and SF remain tighter and more expensive, while Central Valley and Inland Empire have more balanced inventory.
Buyers should get pre-approved for a mortgage, monitor inventory trends, and be ready to act quickly in competitive areas.
Whether you’re buying a home or ready to refinance, our professionals can help.
Mortgage Support — 24/7
No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.
Adjust the parameters based on what you want to track