Los Angeles Housing Market Cools as Buyers Pullback in 2025

Is now the right time to buy or sell in Los Angeles? As of May 2025, the Los Angeles housing market is showing signs of cooling off, with sales and prices experiencing slight pullbacks. However, it's not all doom and gloom, and there are opportunities for both buyers and sellers if you understand the current dynamics. While the market is down 7.9% YOY, the median listing price of homes in Los Angeles, CA was $975K in May 2025, trending up 2.6% year-over-year.

I've been watching the Southern California housing scene for years, and what I'm seeing now is a shift from the frenzy of the past few years to something a bit more… normal. Let’s dig into the details so you can make the best decision for yourself.

Los Angeles Housing Market Cools as Buyers Pullback

The Big Picture: California's Sputtering Market

First, let's zoom out and look at the broader California context. According to the California Association of Realtors (C.A.R.), the state's housing market is facing some headwinds. In May 2025, existing single-family home sales totaled 254,190 on a seasonally adjusted annualized rate. That's down 5.1% from April and 4% from May 2024. The statewide median home price also dipped to $900,170, a 1.1% decrease from April and a 0.9% decrease from May 2024.

Several factors are contributing to this slowdown:

• Lingering Economic Uncertainty: People are still cautious about the economy.
• Elevated Mortgage Interest Rates: Although interest rates have averaged around 6.82% in May 2025 down from 7.06% in May 2024, concerns about the economy still linger and prevent people from considering taking loans.
• Insurance Availability/Affordability: This is a big one, especially in areas prone to wildfires. The high cost (or lack) of home insurance can scare buyers away.

Los Angeles: A Closer Look

Now, let's focus on what’s happening right here in Los Angeles County and the broader metro area. The data reveals a mixed bag:

• Median Home Price: In May 2025, the median price of an existing single-family home in Los Angeles County was $835,480. This is a decrease of 1.7% from $850,270 in April 2025, but an increase of 2.9% compared to $811,610 in May 2024.
• Los Angeles Metro Area The median price of an existing single-family home was $855,000 This is a increase of 0.6% from $850,000 in April 2025, and increase of 1.8% compared to $840,000 in May 2024.
• Sales: Home sales in Los Angeles County decreased by 7.9% compared to May 2024.
• Unsold Inventory Index (UII): The UII for Los Angeles County was 3.9 months in May 2025, up from 2.7 months in May 2024. This means it would take longer to sell all the homes currently on the market.
• Days on Market: The median time it took to sell a home in Los Angeles County was 23 days in May 2025, up from 18.5 days in May 2024.

So, what does all this mean? Quite simply, it's taking longer to sell homes, and while prices are still up year-over-year, they've softened a bit compared to the previous month. LA appears to be aligning to the broader direction of the wider Californian market.

Why the Slowdown? My Take

I think several factors are at play here in Los Angeles:

1. Affordability Crisis: Let's face it, Los Angeles is expensive. Even with slightly lower prices, many people are priced out of the market. The large home prices are not the only factor impacting affordability; insurance rates and property taxes greatly restrict opportunity to get into the market.
2. The “Wait and See” Approach: Some potential buyers are waiting to see if prices will drop further.
3. More Inventory: As the data shows, there are more homes on the market compared to last year. This gives buyers more options and reduces the sense of urgency.
4. Mortgage Rates: Even with rates dipping slightly from the previous year, they are still historically higher than what we have been used to over the past decade.
5. Concerns About Economic Outlook: Broader uncertainty around economic outlook can prevent people considering loans.

Opportunities for Buyers

If you're a buyer, this might be a good time to get into the game. Here's why:

• Less Competition: Bidding wars are less common than they were a year or two ago.
• More Negotiating Power: You can often negotiate a better price or ask for concessions (like repairs or closing cost assistance). President of C.A.R., Heather Ozur, feels “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“.
• More Choices: With increased inventory, you have a wider selection of homes to choose from.

However, don't expect fire-sale prices. Los Angeles is still a desirable place to live, and prices aren't likely to plummet dramatically.

Advice for Sellers

If you're selling, you need to be realistic about the market. Here are my suggestions:

• Price it Right: Don't overprice your home. Look at what comparable homes have actually sold for recently, not just what they're listed for.
• Make it Appealing: Invest in some basic repairs and improvements to make your home stand out. Cleaning, decluttering, and fresh paint can go a long way.
• Be Patient: It might take longer to sell your home than it would have a year ago.

The Future: Crystal Ball Gazing

What's next for the Los Angeles housing market? That's the million-dollar question!

C.A.R.'s Senior Vice President and Chief Economist Jordan Levine feels “Although the market has slowed in recent months, there’s potential for a rebound if economic concerns subside, buyers may take advantage of improved conditions, including deeper price reductions and increased housing inventory.”

Here's what I'm watching:

• Interest Rates: Mortgage rates will continue to play a big role. If they drop significantly, we could see a surge in buyer demand.
• The Economy: A strong economy generally supports a healthy housing market.
• Inventory: If inventory continues to rise, prices could soften further.

Key Takeaways

Here's a summary of where the market is:

• The Los Angeles housing market is showing signs of cooling.
• Sales are down year-over-year.
• Prices are up year-over-year, but softening.
• Inventory is increasing.
• It's taking longer to sell homes.

No matter what the data says, every real estate transaction is personal. It has unique goals, circumstances and limitations.

I think the Los Angeles Housing market is a complex and dynamic story. Whether you're buying or selling (or just curious), do your research. Talk to local real estate agents. And most importantly, make informed decisions that are right for your individual situation.