The California Association of Realtors expects home sales in the state to rise 3.7 percent next year, to 277,900 existing single-family homes, with the statewide median price up 1.4 percent to $894,400. The trade group published its 2027 California Housing Market Forecast on Oct. 7.
The forecast rests on an assumption worth stating plainly: a 30-year fixed mortgage rate averaging 6.6 percent in 2027. That is the same figure C.A.R. has carried for three consecutive years, and it is well below where the market is now.
The numbers
C.A.R. projects 2026 will close out at 268,100 existing single-family sales, a 1.1 percent decline from 271,100 in 2025, with a median price of $882,200, up 0.8 percent from $875,600. Against that base, 2027 is forecast as a recovery year rather than a boom: sales still roughly 38 percent below 2021’s 444,600, and a median price gain slower than general inflation.
Housing affordability β which C.A.R. defines as the “% of households who can afford to purchase a median-priced home” β is forecast to hold at 20 percent, unchanged from the group’s 2026 projection and up from 19 percent in 2025. One in five California households, on this measure, can buy the typical home.
The economic assumptions behind the forecast are benign. C.A.R. has U.S. GDP growth at 2.2 percent in 2027, up from a projected 2.0 percent this year; consumer price inflation falling to 2.4 percent from a projected 3.4 percent in 2026; California unemployment easing to 5.4 percent from 5.5 percent; and California nonfarm job growth of 0.3 percent in both years.
What the association says is holding the market back
“While the market is expected to remain subdued through the end of 2026, demand is anticipated to improve modestly in 2027 as geopolitical tension eases and economic uncertainty subsides,” said Jordan Levine, C.A.R.’s senior vice president and chief economist. On supply, Levine said “the mortgage lock-in effect will continue to keep many potential sellers on the sidelines, but housing inventory in California should loosen next year as market conditions and the lending environment normalize.”
The release calls a continual shortage of homes for sale a defining factor for the market.
C.A.R. President Tamara Suminski, a Southern California broker and Realtor, said, “We’ll start to see market conditions move in a more positive direction for California homebuyers and sellers next year.” She added that an improved but still limited supply of homes for sale would contribute to continued strength in prices, and that “as confidence picks up and mortgage rates ease, we expect more people who have been waiting on the sidelines to make their move in 2027.”
The rate assumption is the whole forecast
Both quotes turn on mortgage rates easing. They are not easing. Freddie Mac’s Primary Mortgage Market Survey put the 30-year fixed average at 7.28 percent for the week ending Oct. 1, up from 7.03 percent a week earlier and 6.34 percent a year before. C.A.R.’s 2027 assumption of 6.6 percent sits about two-thirds of a percentage point below that reading, and the association notes the 6.6 percent figure is itself below the 50-year average of 7.7 percent.
The same day C.A.R. released the forecast, the Federal Reserve published minutes of its Sept. 15-16 meeting showing that most participants thought another increase in the federal funds target range would likely be appropriate by year end, and that officials generally saw inflation risks skewed to the upside. Fed staff described credit conditions as somewhat restrictive for residential mortgage borrowers. The 10-year Treasury par yield has risen since that meeting, from 5.01 percent on Sept. 16 to 5.28 percent on Oct. 7.
None of that makes C.A.R.’s number wrong. The forecast is an annual average for a year that has not started, not a call on this week’s rate sheet. But it is the load-bearing assumption. On our reading, if the 30-year stays near 7 percent through next year, the sales recovery C.A.R. describes is the part of the forecast most likely to give, because it depends on sidelined buyers and locked-in sellers both deciding the cost of moving has come down.
Context in California
The state has spent four years working through the rate shock. Sales fell 23.6 percent in 2022 and another 24.2 percent in 2023, then recovered 4.4 percent in 2024 and 0.7 percent in 2025 before the 1.1 percent dip C.A.R. now projects for this year. Prices have moved far less than volume: the statewide median has risen from $819,400 in 2022 to the $882,200 projected for 2026, a cumulative 7.7 percent over four years.
That pattern β thin transaction counts with prices that barely move β has held through the year. California sales pulled back in July as the median slipped below $900,000, and the day’s national picture has pointed the same way, with refinance volume running at less than half last year’s pace. For agents in the state, the forecast’s practical content is modest: a little more inventory, slightly better affordability, and transaction counts that would still sit below every year from 2020 through 2022.
