After an explosive ride during 2020-2024, home prices in California feel like they were stuck in the doldrums in 2025.
But, what does the year ahead hold? And more to the point, if you own a home in California (or hope to own one next year), what’s in store?
We gathered data from realtors, market surveys and more to analyze what might happen with home prices in the Golden State in 2026.
First, a quick disclaimer: We are journalists, not real estate professionals. Everything here is based on our research, but markets are unpredictable–nothing here is meant to serve as financial or housing advice. Always consult an attorney or realtor before making your own investment decisions.
Where California Home Prices Are Right Now
To understand 2026, you have to start with where the market is ending 2025.
According to the California Association of Realtors (C.A.R.), the statewide median price for an existing single-family home was about $886,960 in October 2025, essentially flat compared with a year earlier (down 0.2%), after a run of big pandemic-era gains.
Sales volume is still well below pre-pandemic levels, with many owners locked into 3% and 4% mortgages and reluctant to sell and take on a new loan near 7%. Inventory has improved from the ultra-tight days of 2021, but it is still constrained compared to normal.
In other words, 2025 has been a “stuck” year: high prices, high rates, and not enough homes for sale.
If you own a home and locked in a fantastic rate in the height of the pandemic, you’re probably not budging. And unless you’re Sam Altman, you probably don’t have the cash to afford a new home at the new, inflated prices and with much higher interest!
The Big California Forecast for 2026
So what can we expect (or at least hope for, because again, unpredictability) in 2026? The professionals have been thinking a lot about that!
C.A.R. released a detailed 2026 California Housing Market Forecast in September. Their baseline call:
- Median home price: Up 3.6% to $905,000 in 2026, a new record. That’d be nice if you own a home here, eh?
- Existing single-family sales: Up about 2%, from 269,000 in 2025 to 274,400 in 2026. So things will get moving a little more.
- Affordability: The share of California households able to afford the median-priced home is expected to tick up from 17% to 18%, which is still extremely low. That’s probably because people in tech are earning more on average–not necessarily good news for normal mortals.
C.A.R.’s economists are assuming that:
- Mortgage rates ease down toward an average of about 6.0% in 2026.
- Active listings rise roughly 10% as more owners are willing to sell. Again, there’s no guarantee of that, especially if the stock market dips or California’s precious crypto takes a hit.
- The home insurance crunch, trade tensions, and overall economic uncertainty remain headwinds but do not tip the market into a downturn.
In plain English: they are calling for a slightly busier market and slightly higher prices, not a boom and not a bust.
What National Forecasters Are Saying
California doesn’t exist in a vacuum (although we of course like to think we’re exceptional here in the Golden State). National trends, like interest rates, do have an impact here.
Not everyone bought NVIDIA in its heyday and now is sitting on piles of cash with which to purchase a luxury home!
National home price expectations
- Fannie Mae’s Q2 2025 Home Price Expectations Survey of more than 100 housing experts projects national home price growth of 2.9% in 2025 and 2.8% in 2026, moderating from 2024 but still clearly positive.
- A Realtor.com outlook highlighted by Newsweek expects U.S. home prices to rise about 2.2% year-over-year by the end of 2026, while prices in 22 metro areas are forecast to fall.
Importantly for California, three of the metros where prices are projected to fall the fastest next year are in the state:
- Stockton: forecast -4.1%
- Sacramento: -3.3%
- San Francisco: -2.5%
Honestly, we’re pretty darn skeptical about that last bit. Again, we’re not realtors. But with all the AI money surging into San Francisco at the moment, the idea that prices would drop in 2026 seems far-fetched.
So based on local data, take those national-level projections with a grain of salt (ideally maldon or perhaps some fancy Himalayan pink salt, because again, this is California, right?)
New housing laws and long-term supply
Over the longer term, California’s new state housing laws are starting to matter. A recent San Francisco Chronicle story, for example, highlighted how state density and streamlining laws (including SB 423 and AB 2011) allowed a proposed 25-story, 790-unit project on a site that local zoning had only planned for four stories.
Projects like that take years to finish, but they show how Sacramento is pushing cities to allow more housing — which should gradually add supply in urban cores and transit-served corridors.
Over time, that can help cool price growth, especially in the Bay Area. It is less likely to affect 2026 prices in places like Danville or Moraga, but it is part of the longer-term picture.
To Sum it All Up
Let’s pull all this together. Based on what’s happened in 2025, experts appear to be predicting slow growth in 2026–both in home prices and in the volume of homes bought and sold–rather than the current duldrums.
That said, the economy still feels precarious. And little is known about what will happen with big forces in the tech industry, which drive a lot of people to California.
If the economy tanks in 2026 or interest rates stay high, we might be in for another slow year. If the economy does well–and if AI money keeps pouring in, in particular–then experts predictions about a better year ahead (for owners, anyway) may well come to pass.
