The current Sacramento housing market is seeing more homes for sale than last year, but sales are down a bit. This means it's slowly shifting towards a more balanced market, but it's still leaning towards being a seller's market. Keep reading, and I’ll break down the key trends and what they mean for you, whether you're buying, selling, or just curious!
Nestled in the Central Valley region of California, Sacramento County boasts a thriving and dynamic housing market. As one of the most populous counties in the state, it offers a diverse range of opportunities for homebuyers and investors alike. Sacramento's housing market stands out compared to other California cities.
Fueled by a strong job market and a steady flow of residents, Sacramento has become a magnet for homebuyers. Let's take a look at the current Sacramento housing market trends.
Current Sacramento Housing Market Trends:
Home Sales
Let's start with the basics: how many homes are actually selling? According to the Sacramento Association of REALTORS®, February 2025 property sales totaled 672 homes. This is down 12% from the 764 sales we saw in February 2024, and also a 4.5% decrease from the 704 sales in January 2025.
What does this mean? Well, fewer homes being sold could indicate that some buyers are taking a step back, possibly due to those pesky mortgage rates. However, it's worth noting that pending sales are up (more on that later), which suggests that things might pick up again soon.
Home Prices
Now, the million-dollar question (or, you know, the half-a-million-dollar question, considering Sacramento prices): what's happening with home prices? Here’s a breakdown of the key price indicators:
- Average Sold Price: In February 2025, the average sold price was $592,000. This is a slight decrease of 1.3% from $600,000 in January 2025, and a tiny 0.3% decrease compared to $594,000 in February 2024. So, prices are pretty stable, but trending slightly downward.
- Average Sold Price per Square Foot: This is a good metric to watch. It’s at $339 in February 2025, a 0.3% increase from last month and a 1.8% increase from last year.
- Median Sold Price: The median sold price in February 2025 was $550,000. It is up 1.9% from $540,000 last month.
- Average For Sale Price: The average for sale price was $678,000, down 1.9% from the previous month.
Are Home Prices Dropping in Sacramento?
While the average sold price has dipped slightly month-over-month, it's not a dramatic drop. The average price per square foot is up, telling me the core value of homes is still holding up. Sellers might be adjusting their listing prices downwards to attract buyers, which is reflected in the average “for sale” price dropping, but actual sale prices are staying relatively consistent.
So, no, home prices aren't collapsing in Sacramento. They're more like…taking a breather. We're seeing some price adjustments, but overall, the market seems to be holding steady.
Comparison with Current National Median Price
So how does Sacramento compare to the rest of the country? Well, according to national figures, the national median home price in February 2025 was $398,400, with a year-over-year increase of 3.8%.
This means that the median home price in Sacramento ($550,000) is notably higher than the national median. Sacramento has been a hot market for a while, and that’s reflected in the price difference. While the national market is seeing more significant year-over-year growth, Sacramento's market is more stable, albeit at a higher price point.
Housing Supply
Okay, let's talk about inventory, or the number of homes available for sale. This is a big story in Sacramento right now.
- For-Sale Listings: In February 2025, there were 1,498 homes listed for sale. That's a whopping 61.6% increase compared to the 927 homes available in February 2024! It's also a 12.9% jump from the 1,327 homes listed last month.
This means buyers have a lot more choices than they did a year ago. And more choices usually mean more negotiating power.
Is Sacramento a Buyer's or Seller's Housing Market?
This is where the “months of inventory” metric comes in. This tells us how long it would take to sell all the homes currently on the market at the current sales pace. Here’s how to interpret it:
- Buyer’s Market: More than 6 months of inventory
- Seller’s Market: Less than 3 months of inventory
- Neutral Market: 3–6 months of inventory
In February 2025, Sacramento had 2.2 months of inventory. This is a significant increase of 82.4% from the 1.2 months we saw in February 2024, and a 15.9% increase from 1.9 months last month.
So, while we're still technically in a seller's market (below 3 months), we're moving closer to a more balanced market. This is good news for buyers, as it means less competition and more opportunities to negotiate.
Market Trends
Let's put all this information together and look at the overall market trends:
- Increased Inventory: The biggest trend is the substantial increase in the number of homes for sale. This is giving buyers more options and shifting the balance of power.
- Stable Prices: While there have been minor fluctuations, home prices are generally stable. Sellers might be adjusting their listing prices to attract buyers, but sale prices are holding up relatively well.
- Slower Sales: Sales are down compared to last year, which could be a sign of decreased buyer demand or increased buyer caution.
- Rising Pending Sales: Pending sales are up, suggesting that buyer activity might pick up in the coming months.
- Longer Time on Market: Homes are taking a bit longer to sell compared to last year. In February 2025, the average days on market (DOM) was 37 days, up 12.1% from the 33 days in February 2024.
- Slightly Lower List Price Ratios: The Sold/Original List Price Ratio was 98%, down 1% from the 99% in February 2024. This means buyers have a little bit more negotiating power.
Here’s a quick summary table:
| Indicator | February 2025 vs. January 2025 | February 2025 vs. February 2024 | Trend |
|---|---|---|---|
| For-Sale Listings | Up 12.9% | Up 61.6% | Increasing |
| Sold Listings | Down 4.5% | Down 12% | Decreasing |
| Pending Sales | Up 11.1% | Up 7.3% | Increasing |
| Avg. Sold Price | Down 1.3% | Down 0.3% | Stable |
| Avg. Days on Market | Down 5.1% | Up 12.1% | Lengthening |
| Sold/Original List Price Ratio | Up 1% | Down 1% | Slightly Down |
| Months of Inventory | Up 15.9% | Up 82.4% | Increasing |
Impact of High Mortgage Rates on the Sacramento Housing Market
We can't talk about the housing market without mentioning mortgage rates. These play a huge role in affordability and buyer demand.
Currently, in March 2025, the average 30-year fixed mortgage rate is around 6.67%, while the 15-year fixed rate is about 5.83%, according to Freddie Mac. Most forecasts predict rates to remain at or slightly above this level in the near future.
Higher mortgage rates make it more expensive to borrow money, which can discourage some buyers or reduce the amount they can afford. This, in turn, can lead to slower sales and price adjustments. The current rate environment is definitely contributing to the increased inventory and slightly slower sales we're seeing in Sacramento.
Is Sacramento a Good Place to Buy a Home in 2025?
The decision to buy a home is deeply personal and depends on individual financial situations, lifestyle preferences, and long-term goals. However, here are some factors that make Sacramento an appealing place to call home:
- Relatively Affordable: While not as affordable as it once was, Sacramento still offers a more attainable cost of living compared to the Bay Area and Southern California, especially in terms of housing.
- Strong Job Market: Sacramento boasts a diverse economy with job opportunities in government, healthcare, education, and technology. The presence of major employers like UC Davis and state government agencies provides stability.
- Quality of Life: Known for its sunny weather, access to outdoor recreation, and vibrant cultural scene, Sacramento offers a high quality of life that continues to attract new residents.
- Central Location: Situated within driving distance of the Bay Area, Lake Tahoe, and the Napa Valley, Sacramento provides convenient access to some of California's most desirable destinations.
Renting vs. Buying in Sacramento: Weighing Your Options
The age-old debate of renting versus buying is particularly relevant in a market like Sacramento, where affordability is a key consideration.
Renting:
- Flexibility: Renting provides flexibility, allowing you to move more easily without the commitment of homeownership.
- Lower Upfront Costs: Renting typically requires a lower upfront investment compared to buying, as you don't need a down payment or closing costs.
- No Maintenance Responsibilities: As a renter, you are generally not responsible for property maintenance or repairs.
Buying:
- Building Equity: Mortgage payments gradually build equity in your home, providing a potential return on investment over time.
- Tax Advantages: Homeownership offers potential tax deductions for mortgage interest and property taxes.
- Stability and Control: Owning a home provides stability, a sense of community, and the freedom to customize your living space.
Sacramento Housing Market Forecast 2025-2026: Will Prices Drop?
You're probably wondering about the Sacramento housing market forecast. Good news! While predictions can shift, current forecasts suggest a slight cooling. Zillow predicts a slight decrease of -0.7% in Sacramento home values over the next year (February 2025 to February 2026). Let's dive into the details and see what this means for you.
Right now, the Sacramento-Roseville-Arden-Arcade area is seeing some movement. According to recent data, the average home value is around $579,956, which is up 2.0% from last year. This suggests that Sacramento homes are still holding their value well. Homes are going under contract in approximately 23 days, so the market isn't exactly scorching hot, but it's certainly not ice-cold either.
Near-Term Forecast: Spring and Early Summer 2025
Let's break down what the experts are predicting for the next few months:
- March 2025: Zillow's forecast for March 2025 anticipates a slight dip of -0.1%.
- May 2025: The forecast for May 2025 indicates a marginal increase of 0.1%.
So, while it's not a dramatic shift, we could see some slight fluctuations in the early months of next year. I think this is because of mortgage rates staying where they are. I feel buyers are waiting for a clear downtrend in mortgage rates before making their move.
One-Year Outlook: February 2025 to February 2026
The most significant forecast to consider is the one-year outlook. As I mentioned earlier, Zillow predicts a -0.7% change in home values between February 2025 and February 2026.
While this might sound concerning, a slight decrease can be healthy for the market. It can help make homes more affordable and prevent the market from overheating. It's worth noting that all markets are different and what happens in Sacramento doesn't necessarily mirror what happens in, say, San Francisco.
Sacramento vs. Other California Housing Markets
Here's a quick comparison of Sacramento's forecast to other major California metro areas:
| Region | March 2025 Forecast | May 2025 Forecast | Feb 2025 – Feb 2026 Forecast |
|---|---|---|---|
| Sacramento, CA | -0.1% | 0.1% | -0.7% |
| Los Angeles, CA | -0.2% | -0.1% | 0.4% |
| San Diego, CA | -0.1% | 0.2% | 1.7% |
| San Francisco, CA | 0% | 0.1% | -2.1% |
| Riverside, CA | 0% | 0.5% | 1.7% |
| Fresno, CA | 0.1% | 0.5% | 1% |
| Bakersfield, CA | 0.2% | 0.9% | 2.3% |
| San Jose, CA | -0.8% | -2.7% | -2.9% |
As you can see, some areas like San Diego and Riverside are projected to see gains, while others, like San Francisco and San Jose, are facing potentially steeper declines. I feel that each of these cities has some unique factor at play that makes its market move in a different way.
Will Home Prices Drop Significantly or Crash in Sacramento?
Based on current forecasts, a major crash in the Sacramento housing market seems unlikely. The projected decrease of -0.7% is a correction rather than a collapse. A true crash would involve much more drastic price drops and widespread foreclosures.
I don't foresee that happening. However, it is important to keep an eye on economic factors like interest rates, inflation, and job growth, as these can influence the market.
Looking Ahead: Possible Forecast for 2026
Predicting beyond a year is tricky, but here's my educated guess: I believe that the Sacramento housing market will likely stabilize in 2026. If interest rates start to come down, we could see a modest rebound. If they stay high, the market might remain relatively flat. It's hard to guess what can happen.
Ultimately, the best approach is to stay informed, work with a trusted real estate professional, and make decisions that align with your individual financial goals and circumstances.
Should You Invest in the Sacramento Real Estate Market in 2025?
When considering whether buying a house in Sacramento is a good investment, it's crucial to examine various factors that contribute to the real estate market's attractiveness. Let's delve into the key aspects to help you make an informed decision.
Sacramento Rental Property Market
One of the key indicators of a strong real estate market is the demand for rental properties. In Sacramento, the rental property market has been robust, with a growing number of individuals and families looking for quality housing. This demand is driven by various factors, including the city's growing job market and its appeal as a place to live.
Investing in a rental property in Sacramento can provide a steady income stream, especially if you choose the right location and property type. It's essential to research neighborhoods and assess rental rates to ensure your investment is profitable.
Sacramento's Cost of Living & Quality of Life
Sacramento boasts a relatively lower cost of living compared to many other major California cities. This makes it an attractive destination for individuals and families looking for affordable housing options and a good quality of life.
The city offers a diverse range of amenities, including parks, cultural attractions, and a vibrant culinary scene. Sacramento's pleasant climate and proximity to outdoor recreational activities also contribute to its high quality of life.
These factors not only make it an attractive place to live but can also drive property value appreciation over time, enhancing the potential for a return on your investment.
Sacramento's Diverse Job Market & Economic Growth
Sacramento's job market has shown considerable growth in recent years. The city is home to a diverse range of industries, including healthcare, government, technology, and education. The presence of government agencies, such as the California State Government, further stabilizes the job market.
A strong and diverse job market can positively impact the demand for housing. Job opportunities attract professionals and families to the area, driving both rental and home purchase markets.
Population Growth of the Sacramento Metro Area
Population growth is a significant factor in the real estate market's health. The Sacramento metropolitan area has been experiencing steady population growth, driven by its economic opportunities and quality of life. An increasing population can lead to higher demand for housing, potentially driving property values upward.
Real Estate Appreciation Trends
One of the primary reasons why buying a house in Sacramento may be a good investment is the city's history of real estate appreciation. Over the past decade, Sacramento has experienced consistent and significant property value appreciation. This trend can be attributed to several factors, including an increase in demand for housing, a limited housing supply, and Sacramento's growing appeal as a desirable place to live.
Investors and homeowners who purchased properties in Sacramento a few years ago have witnessed substantial gains in their property values. While past performance does not guarantee future results, this trend is a positive indicator for potential real estate investors.
Investment Property Tax Benefits
Investing in real estate in Sacramento can offer tax benefits that make it an even more attractive investment. These benefits can include deductions for mortgage interest, property taxes, and depreciation. Be sure to consult with a tax advisor to understand how these deductions can positively impact your overall financial picture.
Resilience in Economic Downturns
During economic downturns, real estate in Sacramento has demonstrated resilience. While property values may experience fluctuations, the city's diversified economy and government stability have often shielded it from severe declines seen in other areas. This stability can provide a sense of security for investors concerned about economic uncertainties.
Other Factors
Other factors that contribute to the attractiveness of Sacramento's real estate market include:
- Transportation Infrastructure: Sacramento benefits from a well-developed transportation infrastructure, including highways and an international airport, making it accessible to residents and businesses.
- Education: The city is home to reputable educational institutions, including universities and colleges, making it an appealing location for students and academics.
- Cultural and Recreational Opportunities: Sacramento offers a rich cultural scene, with museums, theaters, and historic landmarks, providing diverse recreational opportunities for residents.
Consulting Real Estate Professionals
To make a well-informed decision, it's highly recommended to consult with real estate professionals who are knowledgeable about the Sacramento market. Real estate agents, appraisers, and property managers can provide insights into current market conditions, trends, and specific investment opportunities.
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