Thursday, October 8, 2026

California Housing Market Still Stuck as Mortgage Rates Rise and Consumer Confidence Sinks

By EDDIE RIVERA

Weak job growth, high borrowing costs and economic uncertainty leave California homebuyers and sellers facing another difficult autumn

For California homeowners waiting for a better time to sell, and prospective buyers hoping for an affordable mortgage, October is beginning to look distressingly familiar.

A weakening labor market, consumer confidence at its lowest level in 12 years and mortgage rates approaching 7.5% have deepened the housing market’s troubles. Meanwhile, the Trump administration’s tariffs and the continuing conflict with Iran have added inflationary pressures, complicating efforts to bring borrowing costs down.

The latest weekly report from the California Association of Realtors offers little evidence that meaningful relief is coming soon.

Employers added just 29,000 jobs nationally in September, while unemployment edged up to 4.2%. Employment gains for July and August were revised downward by a combined 60,000 jobs.

The weaker figures could persuade the Federal Reserve to postpone another interest rate increase at its October meeting. But job insecurity also makes households reluctant to assume expensive mortgages.

Consumer confidence has deteriorated accordingly.

The Conference Board’s Consumer Confidence Index fell 6.7 points to 81.9 in September, its lowest reading since 2014. Consumers expressed growing concerns about employment, household finances and rising interest rates.

The administration’s domestic and foreign policies have added another layer of uncertainty.

Tariffs have increased costs for imported goods and domestic manufacturers dependent on foreign components. Meanwhile, the conflict with Iran has disrupted energy supplies, pushing oil and gasoline prices higher and threatening to prolong inflation.

Those pressures have contributed to elevated bond yields and mortgage rates, making homeownership increasingly difficult.

The average 30-year fixed mortgage rate recently reached approximately 7.5%, its highest level in nearly three years.

California homeowners, meanwhile, are increasingly unwilling to sell.

According to the Realtors association’s 2026 Housing Market Survey, homeowners now remain in their properties for a record 15 years, largely because they are reluctant to surrender low mortgage rates and favorable property tax assessments.

Only 43% of sellers planned to purchase another home, the lowest proportion in 14 years.

The result is fewer available homes, limited choices for buyers and continued pressure on affordability.

Renters are finding little relief. National median rent slipped just 0.1% in September to $1,388, while multifamily vacancy rates declined to 7%, according to Apartment List.

California Association of Realtors chief economist Jordan Levine has previously warned that trade tensions, insurance costs and broader economic uncertainty could undermine a housing recovery.

Those concerns now appear increasingly relevant.

Even if the Federal Reserve holds rates steady this month, mortgage costs may remain elevated.

For California buyers and sellers who entered 2026 hoping for improvement, the latest figures suggest another prolonged period of waiting.