California Housing Market Forecast 2026: What Orange County Buyers and Sellers Need to Know

The California Association of Realtors just released their 2026 housing market forecast (click HERE for full article), and there's cautiously good news for both buyers and sellers across Orange County and California. Here's what the data reveals and what it means for your real estate decisions.

Key Market Predictions for 2026

Home Sales Will Rebound Modestly California home sales are projected to increase 2% in 2026, reaching 274,400 units after a nearly flat 2025. This modest uptick signals market recovery as conditions stabilize.

Prices Continue Rising, But at a Gentler Pace The median home price is forecast to reach $905,000 in 2026, a 3.6% increase from 2025's projected $873,900. While prices are still climbing, the growth rate remains significantly lower than the dramatic spikes of recent years.

Affordability Shows Small Improvement Housing affordability is expected to edge up to 18% in 2026, meaning nearly 1 in 5 California households will be able to afford a median-priced home, up from just 16% in 2024.

What's Driving the Market Changes

Mortgage Rates Finally Dropping The 30-year fixed mortgage rate is projected to decline from 6.6% in 2025 to 6.0% in 2026. While still higher than pre-pandemic levels, this represents meaningful relief for buyers who've been waiting on the sidelines.

Inventory Continues to Improve Active listings are expected to increase nearly 10% as market conditions normalize and more sellers gain confidence to list their homes.

Economic Headwinds Remain Job growth will slow to just 0.3% in California, and unemployment may tick up to 5.8%. Trade tensions and the ongoing home insurance crisis will continue challenging the market.

What This Means for Orange County Buyers

More Opportunities Ahead After years of fierce competition, buyers will find more inventory and slightly better lending conditions in 2026. The combination of increased supply and lower mortgage rates creates the best buying environment we've seen in years.

Timing Considerations With mortgage rates expected to decline through 2026, buyers may benefit from waiting if they can. However, home prices will continue rising, so the savings on interest may be offset by higher purchase prices.

Competition Will Ease The days of 20+ offers on every listing are fading. Buyers will have more time to make informed decisions and negotiate terms.

Guidance for Orange County Sellers

Seller Confidence Returns As C.A.R. President Heather Ozur notes, seller confidence will improve as prices stabilize and demand begins rising again after a slow 2025.

Strategic Timing Matters With inventory increasing but demand also recovering, sellers who price competitively and prepare their homes well will still see strong results.

Market Normalization Expect a more balanced market where pricing strategy and home preparation matter more than simply being available in a supply-starved environment.

2026 CALIFORNIA HOUSING FORECAST

p = projected

f = forecast

* = % of households who can afford to purchase a median-priced home

The Bottom Line for 2026

California's housing market is transitioning from crisis to cautious optimism. While we won't see the explosive growth of pandemic years, the combination of improving affordability, declining mortgage rates, and increasing inventory creates opportunities for both buyers and sellers.

For Orange County specifically, where inventory has been particularly tight, these statewide trends suggest more balanced conditions ahead—giving buyers more choices while sellers can still expect steady appreciation.

Ready to Navigate the 2026 Market?

Whether you're planning to buy or sell in the coming year, success will depend on understanding these evolving market dynamics and positioning yourself strategically.

Contact me at (714) 909-8808 or vytran@firstteam.com to discuss how these 2026 forecasts impact your specific real estate goals in Orange County.

The market is changing—make sure you're prepared to take advantage.

Vy Tran

First Team Real Estate | Luxury Portfolio International

714-909-8808

vytran@firsttteam.com

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