Los Angeles Housing Market: Forecast and Trends 2025-2026

The Los Angeles housing market is often talked about, debated, and sometimes even feared, but understanding its current trends is key for anyone looking to buy, sell, or simply stay informed. After a period of uncertainty, August 2025 has brought a glimmer of renewed activity. While it’s not a runaway party, home sales in Los Angeles County are showing signs of a gentle rebound, thanks to a welcome dip in mortgage rates and a stabilizing price point. This modest improvement suggests that the market, while still navigating complex currents, is beginning to find its footing.

Los Angeles Housing Market Trends in 2025:

As someone who's spent years observing and working within the L.A. real estate scene, I've seen cycles come and go. This recent shift isn't a wild boom, but rather a calm breath after a period of holding it. What's driving this? Primarily, it's been the subtle but significant drop in mortgage interest rates. For a long time, high rates had many potential buyers on the sidelines, watching and waiting. Now, with those rates coming down from recent peaks, some of that pent-up demand is starting to be released. It's like a dam slowly opening, letting out a steady, manageable stream of activity rather than a flood.

August's Uptick: Sales and Prices in Focus

Let's dive into the specifics, drawing from the California Association of REALTORS® (C.A.R.) data for August 2025. Across California, existing single-family home sales saw a small increase of 0.9 percent compared to July, reaching a seasonally adjusted annualized rate of 264,240. While this is still down slightly (0.2 percent) from August 2024, it marks a positive step forward from the previous month.

Here in the Los Angeles Metro Area, the picture is a bit more nuanced. We saw a month-over-month price dip of -1.0 percent, bringing the median home price to $837,040. However, compared to August 2024, prices are up a respectable 1.2 percent. Sales volume, on the other hand, experienced a more notable month-over-month decline of 9.2 percent, and a year-over-year dip of 4.7 percent. This suggests that while buyers are returning, they're perhaps being more selective or facing continued affordability challenges.

Statewide Median Home Price: A Gentle Climb

On a broader California level, the median home price in August 2025 was $899,140. This represented a 1.7 percent increase from July and a 1.2 percent increase from the previous year. This stabilization is crucial. For months, we saw prices tick downwards year-over-year, which can create a sense of unease. Now, seeing that positive growth, even if modest, provides a much-needed sense of stability. It tells us that the market isn't in a freefall, and sellers are finding buyers willing to meet their asking prices, or very close to them.

What's Behind the Numbers? A Closer Look

It’s easy to get lost in percentages and figures, but what do they really mean for the everyday Angeleno?

• The Interest Rate Effect: As mentioned, the average 30-year fixed mortgage rate in August 2025 was around 6.59%. This might seem high compared to historic lows, but it's a significant improvement from the higher rates seen earlier in the year. For a buyer with a $700,000 mortgage, a drop of even 0.5 percent can save thousands of dollars per year, making those dream homes feel a little more attainable.
• Inventory Levels: A Slowing Pace of Growth: The Unsold Inventory Index (UII) ticked up to 3.9 months in August, meaning it would take about four months to sell all available homes at that pace. This is up from 3.2 months in August 2024. While higher inventory generally favors buyers, the pace of inventory growth is slowing. Active listings were up 23.5 percent year-over-year, but this is the slowest growth rate since March 2024. This tempering of new supply suggests that sellers are still somewhat cautious, and the market isn't being flooded with homes.
• Time on Market: A Slight Lengthening: Homes in California are taking longer to sell. The median time to sell a single-family home in August 2025 was 31 days, up from 22 days a year ago. In the Los Angeles Metro Area, this figure was even higher at 33 days. This indicates that buyers have a bit more breathing room and aren't facing the intense bidding wars that characterized the hottest market days. This extended time on market also contributes to the stabilizing prices; sellers aren't feeling the pressure to drastically cut prices when they have more time to find the right buyer.
• Sales-to-List Price Ratio: Sweetening the Deal: The statewide sales-price-to-list-price ratio was 98.3 percent in August 2025, down from 100 percent a year prior. What this means is that, on average, homes are selling slightly below their asking price. For buyers, this is an inviting trend. It signifies that well-priced homes are selling quickly, but there's still room for negotiation on others, making it a more balanced environment than the “scorched earth” seller's market of the recent past.

Los Angeles County Specifics: A Closer Look Within the Metro

While the Los Angeles Metro Area data provides a good overview, diving into Los Angeles County itself reveals more granular insights. In August 2025, within Los Angeles County, the median sales price for existing single-family homes was $930,720. This represented a 2.1 percent increase month-over-month and a solid 1.2 percent increase year-over-year.

However, the sales volume paints a slightly different picture. Los Angeles County saw a notable decrease of 16.0 percent in sales month-over-month and a significant 12.3 percent drop year-over-year. This is a key takeaway: while prices are holding steady and even inching up, the sheer number of transactions is down significantly.

This disparity between price stability and declining sales volume often points to a few things:

1. Affordability Constraints: Even with slightly lower interest rates, the sheer cost of housing in L.A. County remains a major barrier for many. A 1.2% price increase might be a positive market indicator, but at this price point, it still represents tens of thousands of dollars, which is substantial for many households.
2. Inventory Mix: It's also possible that the types of homes being sold are shifting. If higher-priced homes are the ones transacting, it can artificially boost the median price even if the number of overall sales is down.
3. Seller Holdout: Some sellers might be looking at the stable prices and assuming they can still get top dollar. However, with increased time on market and slightly softer buyer demand in terms of volume, they might need to adjust their expectations or pricing strategies to attract buyers.

The Southern California Region: A Wider Lens

Broader Southern California, which includes L.A. County, shows a median price of $873,480 in August 2025. This is largely flat month-over-month (-0.2%) but shows a 1.2 percent gain year-over-year. Sales in Southern California experienced a 7.3 percent decline month-over-month and a 3.7 percent drop year-over-year. This reinforces the trend seen in L.A. County – stable or slightly rising prices but a noticeable slowdown in transaction volume.

Looking Ahead: The Unpredictable Future

The real estate market is never static. My gut feeling, based on years of experience, is that we'll continue to see this cautious optimism prevail for the remainder of 2025, provided interest rates don't spike again. The underlying demand for housing in Los Angeles is still strong, fueled by population growth and its status as a desirable place to live. However, the affordability challenge will remain a significant factor, capping rapid price appreciation and keeping sales volumes from exploding.

The key will be how the interplay between mortgage rates, inflation, and overall economic health evolves. If rates remain somewhat stable, we could see a more consistent, albeit perhaps slower, pace of sales. If inflation picks up, potentially leading to higher rates, we might see a return to more stagnant or declining sales figures. For now, though, there's a sense that the market is finding its equilibrium, offering a more balanced environment for buyers and a clearer picture for sellers. It’s a time for informed decisions, not impulsive actions.

Los Angeles Housing Market Forecast: Will Prices Rise or Fall?

You're probably wondering what's going to happen with prices. The Los Angeles housing market forecast suggests a slight decrease over the next year. While the national real estate market may pick up, Los Angeles specifically will likely see some downward pressure on home values. Let's dig into the details and see what factors are shaping the future of housing in LA.

Currently, the average home value in the Los Angeles-Long Beach-Anaheim area is $972,837. That's up about 1.1% from last year, which isn't a huge jump. Homes are going pending pretty quickly, in about 20 days. But, is this trend expected to continue?

According to Zillow's latest projections, here's what they see happening in the Los Angeles housing market over the next year:

Basically, Zillow anticipates a gradual cooling off. While it's not a crash, they believe values will edge down a bit.

How Does L.A. Compare To Other California Markets?

Okay, Los Angeles might see a slight dip. But what about other parts of California? Here's a quick look at how the forecast compares to other major metro areas using the same forecast data:

As you can see, Los Angeles' forecasted decline is less than some other California cities, but still a bit downward.

What About the National Picture?

While the Los Angeles housing market faces a slight correction, the national outlook, according to the National Association of Realtors (NAR), is more positive. Their Chief Economist, Lawrence Yun, thinks “brighter days may be on the horizon.” Here's what he's predicting:

• Existing home sales are expected to rise by 6% in 2025 and 11% in 2026.
• New home sales are projected to climb by 10% in 2025 and another 5% in 2026.
• Median home prices are forecasted to continue increasing modestly, with a rise of 3% in 2025 and 4% in 2026.
• Mortgage rates are anticipated to average 6.4% in the second half of 2025 and dip further to 6.1% in 2026.

He considers lower mortgage rates the “magic bullet” for boosting the market.

Will Home Prices Crash in Los Angeles?

Based on these forecasts, a crash seems unlikely. While there seems to be a real estate market slowdown and a price correction, a significant crash seems unlikely. The Los Angeles market is still competitive, and demand remains relatively strong. A slight dip in prices could even be a good thing, making homes more affordable for potential buyers.

Looking Ahead to 2026

Predicting beyond a year is always tricky, but if the NAR's predictions hold true, the Los Angeles housing market could see a slight recovery in 2026. With potentially lower mortgage rates and a growing national market, LA could mirror this trend, evening out back around where it is now. However, local economic conditions and housing supply will play a significant role. It's best to keep an eye on the data and consult with a real estate professional for the most up-to-date advice.

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