Median price momentum crossed into positive territory in August 2025 after negative median price trends which began in May 2025.. Supply increases coupled with a very low affordability level (15%) and declining consumer sentiment s are the likely cause of median price softness. clearly supporting price increases in spite of higher interest rates. Sales momentum fell below the 0% line in February 2025. Thus, California supply is still low st at 3. months as of August 2025 but watch out; were at 3.9 months as of August and year-over-year supply momentum has been generally rising all year. Be careful when we get to 4.5 to 5 months of supply with low affordability.
The last traditional affordability figure published as of the above date applied to Q2 2025. Mortgage terms are a component of the affordability calculation. The last reported level is 15%. This is down from the 17% level of the previous quarter. Usually there is a sell single at 20% when the index is falling since the time lag in reporting gives you time to prepare to sell at 20% . However, traditional affordability has been bouncing between 15% and 17% since mid 2022. If history repeats, we won’t be buying until affordability approaches the 40% level. We believe the only factor mitigating median price movement to the downside is supply which was reported at 3.9 months for August 2025.
California single family median price momentum fell below the 0% line in May 2025 and just crossed back slightly in August suggesting we may be back in the wealth building stage. We’ll keep an eye on this as interest rates, high prices, and affordability may bring us back down below the 0% line. If rates drop and supply remains low, continued upward year-over-year momentum is a real possibility.
What does all this mean? Well, to us it means there’s no rush to buy. Rising supply, low affordability, low consumer sentiment, and median price momentum around the 0% line leave us in a hold to sell mode (with a leaning more toward the latter).
