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Median home prices in California have declined year-over-year. This reflects a cooling trend compared with prior years when prices climbed rapidly.
One reason prices haven’t surged is increased housing inventory relative to previous tight market conditions. With supply rising, buyers have more options, which can moderate price pressures.
Having said that, California’s median home price is forecast to rise about 3.6% in 2026. This follows smaller increases over the past couple of years, indicating a steady but moderate price climb.
Here’s an update on current home price trends across the state of California, with a “best guess” outlook stretching into 2026.
Historically speaking, home prices in California tend to rise steadily over time. That’s because the Golden State often experiences supply shortages that increase the demand for homes. Many states are experiencing such shortages, but the situation is more severe in California’s major cities and metro areas.
Mortgage rates have increased quite a bit over the past few years, leading to a reduction in buyer demand, despite rates having dipped over the past year. With fewer buyers in the market bidding on houses, home prices began to cool.
More recently, however, California home prices have slowed. The statewide median house price has decreased over the past few months.
According to Zillow, California’s average home price dipped 1.9% year-over-year and now sits at $756,323.
So it seems that the state of California is going through a similar transition phase as other states across the country.
Home sales in California have actually declined over the past few months. Normally, such a reduction in demand from buyers would either keep home prices flat or cause them to decline.
That said ,median prices in early 2026 remained above many levels from earlier years and were down only slightly compared to the prior year.
This combination — lower sales with relatively firm prices — suggests that while fewer homes are selling, demand overall has not collapsed. Instead, the market is balancing between sellers seeking more and buyers being more selective.
Although inventory has risen compared with recent history, it remains below what many would consider a balanced market in many parts of California, which helps keep downward pressure on prices modest.
Housing market analysts and economists often measure the overall speed or pace of a real estate market by using a measurement known as “days on market,” or DOM. This metric indicates how long homes stay on the market before going under contract or being sold.
A higher number of “days on market” indicates a slower market, while a lower number reflects a fast-moving and competitive real estate scene.
Since the start of 2026, the statewide median days on market within California has increased steadily. Essentially, this means the real estate market has decelerated and that homes are selling a little more slowly now than last year.
The state’s median DOM rose above 60 days in February 2026, according to RedFin.
So, getting back to the question we started with. What’s the outlook for home prices in California? Will they keep rising through this year and into the next? Will they flatten out or drop again?
No one can predict future California housing market trends with complete accuracy. But it seems that the current supply-and-demand situation is unlikely to change dramatically anytime soon. That said, experts suggest that home prices in California will rise at a moderate pace over the coming months.
Given that outlook, home buyers who are considering a purchase in the near future might want to take action sooner rather than later.
If you’re looking to buy in California, we can help. At Sammamish Mortgage, we offer various mortgage options for you to choose from, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Since 1992, we’ve been helping clients across California, Washington, Idaho, Oregon, and Colorado. Visit our website to get an instant rate quote or to use our online mortgage calculator. Call us today to have your mortgage questions answered to get pre-approved for a mortgage.
Most projections suggest modest price growth rather than sharp increases. Slower sales activity and improving inventory are expected to keep appreciation steady instead of rapid.
Interest rates, housing supply, employment trends, population movement, and overall economic growth all play key roles in shaping price expectations.
Higher mortgage rates typically reduce buyer demand, which can slow price growth. Lower rates, on the other hand, tend to stimulate demand and support higher prices.
Possibly. Regional dynamics vary widely. Coastal metros often behave differently from inland areas due to inventory levels, job markets, and local demand conditions.
In many areas, conditions are gradually shifting toward a more balanced market as inventory improves. However, highly desirable neighborhoods may still favor sellers.
An increase in new housing supply can help moderate price growth. Limited construction, however, tends to support higher prices due to ongoing shortages.
Timing the market is difficult. Buyers should focus more on affordability, long-term plans, and financing terms rather than trying to predict short-term price shifts.
Luxury markets often react differently than entry-level homes. High-end properties may see more price variability depending on economic confidence and investment trends.
Forecasts are based on current data and economic models, but unexpected changes—such as shifts in interest rates or employment—can alter projections quickly.
Whether you’re buying a home or ready to refinance, our professionals can help.
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