If you're trying to figure out what's going on with the Southern California housing market, you're not alone. In May 2025, the Southern California housing market experienced a slight downturn, with home sales and prices showing a minor pullback, reflecting broader economic uncertainties and elevated mortgage rates. Understanding these housing market trends is key whether you're thinking of buying, selling, or just keeping an eye on your investment. Let's break down what's happening.
Southern California Housing Market Trends: What's Happening in 2025?
Home Sales in Southern California
Across the state, things have been a bit bumpy. In May 2025, existing, single-family home sales in California totaled 254,190 on a seasonally adjusted annualized rate. That means, if sales kept going at the same pace all year, that's how many homes would be sold. Now, here’s the kicker: that number is down 5.1 percent from April and down 4.0 percent from May 2024. Southern California specifically mirrored this trend.
- Southern California: Home sales fell by 7.6% year-over-year.
When we look at specific counties within Southern California, we see a mixed bag. Some counties experienced declines, while others saw increases in home sales.
- Imperial: -5.9%
- Los Angeles: -7.9%
- Orange: -16.0%
- Riverside: -8.2%
- San Bernardino: -3.3%
- San Diego: -4.6%
- Ventura: -1.2%
It is important to note that Orange County experienced the most significant sales decline in Southern California, with a decrease of 16%. Overall, the trend suggests a cooling of the market in Southern California.
Comparison with National Home Sales in the U.S. in May 2025
Nationally, home sales are also experiencing a slight decrease. According to the National Association of Realtors (NAR), home sales were down by 0.7% year-over-year in May 2025. This suggests that the dip in Southern California's home sales is part of a larger national trend. While national figures show a decrease, keep in mind that real estate is very local!
Home Prices in Southern California
Now, let's move on to the big question: what's happening with home prices in Southern California?
In May 2025, the statewide median home price was $900,170. That’s down 1.1 percent from April and down 0.9 percent from May 2024.
- Southern California: The median home price was $888,000, which is a slight increase of 0.9% from May 2024.
Are Home Prices Dropping?
Well, it's complicated. While the statewide median price did see a slight dip, the Southern California region actually saw a minor increase. This suggests that prices are leveling off, but not necessarily crashing. As Heather Ozur, C.A.R. President, said, “With home prices leveling off and more homes coming onto the market, it’s a great time for well-qualified buyers to enter the market.”
Here's a more detailed look at median home prices in Southern California counties:
- Imperial: $377,450 (-6.8%)
- Los Angeles: $835,480 (2.9%)
- Orange: $1,419,500 (-0.2%)
- Riverside: $638,000 (-1.0%)
- San Bernardino: $497,940 (5.6%)
- San Diego: $1,050,000 (2.4%)
- Ventura: $985,000 (6.5%)
From the data, Los Angeles, San Bernardino, San Diego, and Ventura counties saw an increase in prices. On the other hand, Imperial, Orange, and Riverside saw a decline.
Comparison with Current National Median Price in the U.S.
Nationally, the median home price in May 2025 was $422,800, with a year-over-year change of +1.3%. This is significantly lower than the median price in Southern California. The California market remains more expensive than the national average.
Housing Supply in Southern California
Okay, so what about the number of homes available? This is a big factor in whether it's a good time to buy or sell.
In May 2025, the unsold inventory index (UII) in California was 3.8 months, up from 3.5 months in April and 2.6 months in May 2024. This means it would take 3.8 months to sell all the homes currently on the market at the current sales rate. Total active listings in May rose nearly 50 percent year-over-year.
Is Southern California a Buyer's or Seller's Housing Market?
Generally, a UII of 6 months or higher is considered a buyer's market, meaning there are more homes available than buyers. A UII of less than 6 months is considered a seller's market, where there are more buyers than homes.
With a UII of 3.8 months, Southern California is still leaning towards a seller's market, but the rising inventory suggests it's becoming more balanced. This means buyers might have a bit more negotiating power than they did a year ago.
Market Trends in Southern California
So, what's driving these changes in the Southern California housing market? A few key factors:
- Economic Uncertainty: Lingering economic uncertainties continue to affect buyer confidence.
- Insurance Availability/Affordability: Rising insurance costs and availability are affecting some areas.
- Elevated Mortgage Rates: Let's dive into this a bit more.
Impact of High Mortgage Rates on Southern California Housing Market
High mortgage rates are probably the biggest factor impacting the Southern California housing market right now. Higher rates mean higher monthly payments, which can put a serious damper on affordability.
- Current Rates: As of June 26, 2025, the average 30-year fixed mortgage rate is around 6.77%, and the 15-year fixed rate is about 5.89%.
- Future Forecasts: Most experts predict mortgage rates will stay around this level for the rest of the year, possibly dipping slightly to between 6.0% and 6.5% by the end of 2025.
Here's a table summarizing the key data points:
| Metric | Southern California (May 2025) | National (May 2025) |
|---|---|---|
| Median Home Price | $888,000 | $422,800 |
| Year-over-Year Price Change | +0.9% | +1.3% |
| Home Sales Change YOY | -7.6% | -0.7% |
| Unsold Inventory Index | 3.9 months | N/A |
| Days on Market | 25 days | N/A |
| 30-Year Mortgage Rate (Current) | 6.77% | 6.77% |
| 30-Year Mortgage Rate (Forecast End of Year) | 6.0-6.5% | 6.0-6.5% |
The Bottom Line for Southern California
The Southern California housing market is in a state of flux. Home sales are down, prices are leveling off, and inventory is rising. High mortgage rates and economic uncertainty are playing a big role.
If you're a buyer, this might be a good time to start looking. You'll have more choices and potentially more negotiating power. But be prepared for those higher mortgage rates!
If you're a seller, it's important to be realistic about pricing. The days of easy profits might be over, but well-priced homes in desirable locations are still selling.
As C.A.R. Senior Vice President and Chief Economist Jordan Levine said, “Although the market has slowed in recent months, there’s potential for a rebound if economic concerns subside.” Keep an eye on the market and talk to a local real estate agent for the most up-to-date information.
Southern California Housing Market Forecast 2025
Looking ahead, I believe that the Southern California housing market will continue to be a competitive environment for buyers, but with some opportunities.
- I expect home price appreciation to slow further in 2025, with growth rates potentially declining to the 2-4% range.
- The housing supply is expected to increase gradually, offering more choices to buyers.
- Interest rates will likely remain elevated, but their impact on the market is expected to lessen as people adjust to the new norm.
- Demand for housing in Southern California will likely remain strong, driven by population growth and the desirability of the region.
My overall forecast is for a more balanced market in 2025. While it will still be a seller's market in many areas, buyers will have slightly more leverage.
In my experience, this market is more sensitive to changes in interest rates than some others. As interest rates stabilize or potentially decline, we could see renewed buyer confidence and a pickup in activity. I also feel that areas with a higher concentration of jobs, including those around the tech and entertainment sectors, are likely to remain robust compared to some of the more rural parts of Southern California.
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