Thursday, September 24, 2026

California Home Sales End Summer on an Upswing, but the Road Ahead Looks Rougher

By EDDIE RIVERA

Firmer prices and steadier sales mask a sharp drop in pending deals as the Fed resumes rate hikes

California’s housing market closed out the summer buying season with a modest win. What comes next looks harder. 

Sales of existing single-family homes rose 2.4% in August from July to a seasonally adjusted annualized pace of 269,620, the California Association of Realtors reported this week. That was 1.4% above the year-earlier rate and marked the fifth straight month in which sales outpaced 2025 levels. 

Prices firmed as well. The statewide median climbed 1.6% from July to $901,420, pushing back above the $900,000 mark. The monthly gain beat the long-run July-to-August average of 1.2%, though it trailed the 2.2% average of the past decade. From a year earlier, the median rose just 0.1%, the thinnest annual gain in four months. 

The more telling number may be the one that looks forward. Pending sales, which track contracts signed but not yet closed, fell 1.9% from July and 8.5% from a year earlier. That was the steepest annual decline since September 2023 and ended a brief two-month rebound. 

Borrowing costs are the main culprit. The Federal Reserve last week raised its benchmark rate by a quarter percentage point to a range of 3.75% to 4%, its first increase in three years, and left the door open to another before year-end. Policymakers cited inflation still running above their 2% target amid a strengthening economy and higher energy prices. The average 30-year fixed mortgage rate eased slightly after the decision, but stayed near its highest level in 20 months, according to Mortgage News Daily. 

The realtors group expects sales to soften through fall and winter as affordability worsens, though it still projects the statewide median will finish 2026 slightly above last year. 

Few economists see much reason for optimism beyond that. Mark Zandi, chief economist at Moody’s Analytics, has warned that energy costs from the Iran war threaten to do more economic damage than tariffs, compounding the drag from trade policy. Even if the fighting ended quickly, he wrote recently, the economy would likely avoid recession, but “growth will fall well short of potential.” 

Consumer spending has held up better than expected, the association noted, and year-to-date activity remains modestly ahead of 2025. In a market this murky, that counts as a bright spot.