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Over the past several months, California home prices have been rising due to limited inventory. Forecasts suggest that house values in California could begin to rise at a moderate pace through the end of this year and into the next. This would mirror the general outlook for the nation as a whole, and low supply levels have a lot to do with it.
Here’s an update on current home price trends across the state of California, with a “best guess” outlook stretching into 2025.
Historically speaking, home prices in California tend to rise steadily over time. That’s because the Golden State often experiences supply shortages that increase the demand for homes. Many states are experiencing such shortages, but the situation is more severe in California’s major cities and metro areas.
Mortgage rates have increased quite a bit over the past few years, leading to a reduction in buyer demand. With fewer buyers in the market bidding on houses, home prices began to cool.
More recently, however, California home prices have shown some upward momentum. The statewide median house price has risen for the past few months.
According to Zillow, California’s average home price edged up 2.3 percent year-over-year and now sits at $788,920.
So it seems that the state of California is going through a similar transition phase as other states across the country. Home prices appear to be heading north.
Home sales in California have actually declined over the past couple of months. Normally, such a reduction in demand from buyers would either keep home prices flat or cause them to decline. But that’s not the case in California.
Like other housing markets across the country, house values in California are currently rising despite a modest decline in sales. This creates something of a paradox. Why are home prices rising at a time when buyer demand has softened?
The answer has to do with inventory.
Housing market supply levels in California have declined steadily since the start of 2025. The short version is that there are far fewer homes listed for sale today than there were not long ago.
Buyers who are still in the market are competing for a much smaller number of properties. These trends have put upward pressure on prices, resulting in the monthly gains that have occurred since late spring.
To put it differently: Tighter inventory conditions have made the real estate market more competitive again, despite the effects of higher mortgage rates.
Housing market analysts and economists often measure the overall speed or pace of a real estate market by using a measurement known as “days on market,” or DOM. This metric indicates how long homes stay on the market before going under contract or being sold.
A higher number of “days on market” indicates a slower market, while a lower number reflects a fast-moving and competitive real estate scene.
Since the start of 2025, the statewide median days on market within California has increased steadily. Essentially, this means the real estate market has decelerated and that homes are selling a little more slowly now than last year.
The state’s median DOM rose above 42 days in April 2025.
So, getting back to the question we started with. What’s the outlook for home prices in California? Will they keep rising through this year and into the next? Will they flatten out or drop again?
No one can predict future housing market trends with complete accuracy. But it seems that the current supply-and-demand situation is unlikely to change dramatically anytime soon. So the most likely scenario is that home prices in California will continue to rise at a moderate pace over the coming months.
Given that outlook, home buyers who are considering a purchase in the near future might want to take action sooner rather than later.
If you’re looking to buy in California, we can help. At Sammamish Mortgage, we offer various mortgage options for you to choose from. Visit our website to get an instant rate quote or call us today to have your mortgage questions answered!
Whether you’re buying a home or ready to refinance, our professionals can help.
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No Obligation and transparency 24/7. Instantly compare live rates and costs from our network of lenders across the country. Real-time accurate rates and closing costs for a variety of loan programs custom to your specific situation.