When you’re thinking about making a big move, whether buying or selling, the question everyone asks is: “What's really happening in the market?” When it comes to the Southern California housing market, the end of 2025 offered a mixed but ultimately stable picture. Sales picked up month-over-month, showing a renewed interest from buyers, while prices across much of the region held remarkably steady or saw modest gains despite a slight dip in the statewide median.
The latest report from the California Association of REALTORS® (C.A.R.) provides some excellent insights into December 2025. It tells a story of an evolving market, one that's finding its footing after some ups and downs, and it's particularly fascinating to see how our local counties are performing compared to the broader state.
Southern California Housing Market Trends
Home Sales: A December Boost for Southern California
If you were watching the market a few months ago, you might have noticed things felt a bit sluggish. But December brought a pleasant surprise. C.A.R. reports that California's statewide existing single-family home sales saw a 2.0% jump year-over-year. For our specific region, Southern California echoed this positive trend with a respectable 1.7% increase in sales year-over-year. This is a great sign because it tells me that buyers, perhaps spurred by improving mortgage rates, were more willing to make moves as the year closed out.
Looking at the month-over-month numbers, the region saw a significant 13.5% increase in sales from November to December. This suggests that while there can be seasonal slowdowns, strong underlying demand is still present. It’s worth noting that this December surge brought the annual sales level for 2025 up slightly from 2024, indicating a strengthening foundation for our market.
Let's break down some of our counties:
- Imperial County saw a solid 9.5% year-over-year sales increase.
- Orange County registered a 2.4% year-over-year sales increase.
- San Bernardino County experienced a healthy 6.1% year-over-year sales increase.
- Los Angeles and Ventura Counties also saw modest gains at 0.9% and 1.4% respectively.
- San Diego County was a bit of an outlier, with sales dipping slightly by 0.6% year-over-year, even as prices rose. This shows that despite overall regional trends, local market dynamics can vary quite a bit.
Home Prices: Stability with County-Specific Growth
When we talk about prices, the statewide median home price in December 2025 was $850,680, which was down slightly from both November and December 2024. However, here in Southern California, our median price actually nudged up by 0.6% year-over-year to $855,000. Month-over-month, we saw a slight dip of 0.6%, which is pretty typical as the year winds down and intense competition eases.
What I find most interesting is the resilience of prices in Southern California. While the state saw a yearly decline, our region bucked the trend. This tells me that the demand for homes in our specific area, with its appealing lifestyle and robust economy, continues to be strong.
Here's how some counties stacked up:
- Imperial County led the region with an impressive 21.5% year-over-year increase in its median price. What a jump!
- San Diego County saw a good 2.6% increase.
- Orange County and Ventura County both reported 2.1% and 2.0% increases, respectively.
- San Bernardino County also saw its median price rise by 2.0%.
- Riverside County had a modest 1.6% increase.
- Los Angeles County was the only one to see a year-over-year price decrease of 2.4%.
In my experience, these variations highlight the hyper-local nature of real estate. What's happening in Imperial or Orange County might be quite different from Los Angeles, even within the same broad region.Factors like job growth, specific inventory levels, and buyer competition within each county play a huge role.
Housing Supply: A Gradual Rebalancing Act
The amount of homes for sale, or housing supply, is always a big factor. For Southern California, the Unsold Inventory Index (UII) in December sat at 2.9 months. This means that if no new homes came onto the market, it would take about 2.9 months to sell all the current listings. This is down from 3.8 months in November but just slightly up from 2.8 months in December 2024.
What does this tell me? Well, we’re seeing a bit of a rebalancing. Statewide, active listings have gone up year-over-year for 23 months straight, but the pace has slowed down. In Southern California, the median time it took to sell a home was 35 days, which is the same as November but a bit longer than the 31.5 days reported in December 2024. This extended time on market suggests buyers have a little more room to breathe, and sellers might need to be more realistic with pricing, a shift from the rapid-fire sales we saw a couple of years ago.
Market Trends: Setting the Stage for 2026
So, what's really driving these shifts? A big piece of the puzzle is mortgage rates. C.A.R. reported that the 30-year fixed-mortgage rate averaged 6.19% in December, a noticeable drop from 6.72% a year earlier. Lower rates often give buyers more purchasing power, which directly impacts activity.
Tamara Suminski, C.A.R.'s 2026 President, who is also a broker right here in Southern California, shared her optimism, saying, “As price growth eased toward the end of the year and mortgage rates fell to near-three-year lows, the stage is set for a more optimistic 2026.” I couldn't agree more. This sentiment aligns with what I’m observing on the ground: renewed buyer confidence.
Jordan Levine, C.A.R.'s Chief Economist, also confirmed that housing affordability saw some improvement in the last quarter of 2025. He expects “modest economic growth and continued progress for the housing market in 2026.”
From my perspective, this means we're likely heading into a more balanced market. Buyers will have more options and potentially more negotiating power, while sellers can still expect a good return if their properties are priced correctly and well-presented. It’s no longer the wild west, but it’s still a thriving place to own a home.
Southern California Housing Market Forecast 2026
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.
Stability with Subtle Shifts: I expect the Southern California housing market to continue on its path of relative stability. We're unlikely to see a massive surge in sales similar to what we experienced a couple of years ago. Instead, expect more of this gradual, measured activity.
Mortgage Rates are King: The direction of mortgage rates will be the biggest influencer. If rates continue to ease, we could see a more significant uptick in buyer activity. If they start climbing again, momentum might stall. I'm keeping a close eye on economic indicators that could influence the Federal Reserve's decisions.
Affordability Remains Key: For many, especially in areas like Los Angeles and Orange County, affordability will remain a significant challenge. This will likely continue to drive interest towards more accessible regions like the Inland Empire and parts of the Central Valley.
Inventory Management for Sellers: Sellers who price their homes correctly and present them well will continue to have the best chance of success. The days of multiple offers above asking price might be less common, but well-positioned homes will still attract serious buyers.
Regional Disparities Will Persist: As we’ve seen, different counties and regions will perform differently. Ventura, with its recent sales boost and price drop, could see continued buyer interest. Other areas like San Bernardino might remain strong due to their relative affordability.
The “Wait-and-See” Approach: Many potential buyers are still in a “wait-and-see” mode, hoping for even better conditions. However, the longer they wait, the more they might miss out on current opportunities, especially if rates begin to rise again.
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 2026, select U.S. cities are projected to see surging demand, rising rents, and appreciation—creating prime opportunities for investors seeking passive income and long‑term wealth.
Work with Norada Real Estate to find stable, cash-flowing markets beyond the bubble zones—so you can build wealth without the risks of ultra-competitive areas.
Recommended Read:
