August 2025 year over year sales increased (-1.2%) reversing year-over-tear declines that began in May 2025 . California single family home supply for the same period was reported at 3.9 months. This is an 27.6% year over year increase, however, supply has been bouncing between 3.7 and 4.3+- months since January of this year. That’s notably higher than the 2024 range of 2.6 to 3.6 months. So far, however, supply is below what we call the “danger line” but keep an ye out for median price softness once supply starts pushing the 4.5 to 5 month area.
With a the California Q2 ’25 traditional affordability index at 15%, one would expect some price damage – and that’s what we saw throughout most of 2025. Year-over-year median price momentum crossed the zero percent line in May 2025.. Historically (since 2011), median California prices tend to generally drop between August and February. We saw that come earlier in 2025 but, surprisingly, August 2025 year-over-year single family median price were up slightly at 1/2%. Since we’re using year-over-year data, median price momentum below the zero percent line (and outside the wealth-building time period) is not a good thing for sellers.
People are still not willing to give up those 4% or less mortgages to move up to a larger home. Per Redfin Data, just under 60% of US mortgages carry a note rate of 4% or less. This is probably one factor mitigating supply increases. Hence, supply remains relatively low. In fact, California supply has been generally around or under 4 months for 10+- years. However, keep an eye on supply as it is increasing and will likely impact median prices. Of course there are many external factors that can influence trends. So assuming no wars, gas shortages, political upheaval, major population exodus, or similar incidents , it’s our opinion that if supply starts pushing the 5-month level and traditional affordability stays in the 15% area, we will see increased median price degradation. Check out the charts and tell us what you think.
The following data applies to California as a whole and applies only to single family dwellings. Every local market is different. If you need help with your local market, simply call us or fill out the contact page.
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