California housing affordability improves from third-quarter 2025 and a year ago, C.A.R. reports

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CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.)

Feb 10, 2026, 10:00 ET

Eighteen percent of California households could afford to purchase the $869,300 median-priced home in the fourth quarter of 2025, up from 17 percent in third-quarter 2025 and up from 16 percent in fourth-quarter 2024.
A minimum annual income of $213,200 was needed to make monthly payments of $5,330, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.35 percent interest rate.
Twenty-eight percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $159,200 was required to make a monthly payment of $3,980.

SACRAMENTO, Calif., Feb. 10, 2026 /PRNewswire/ -- Moderating home prices and cooling market competition lowered borrowing costs and allowed more Californians to qualify for mortgages and improve their chances of buying a home in the fourth quarter of 2025, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2025-Q4

Moderating home prices and cooling market competition lowered borrowing costs and allowed more Californians to qualify for mortgages and improve their chances of buying a home in the fourth quarter of 2025.

Eighteen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in fourth-quarter 2025, up from 17 percent in the third quarter of 2025 and up from 16 percent in the fourth quarter of 2024, according to C.A.R.'s Traditional Housing Affordability Index (HAI). Despite recent gains, low affordability continues to challenge both buyers and sellers statewide.

The fourth-quarter 2025 figure is less than a third of the affordability index peak of 56 percent in the fourth quarter of 2012. C.A.R.'s HAI measures the percentage of all households that can afford to purchase a median-priced single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

The effective interest rate declined for the third consecutive quarter, dropping to its lowest level since third-quarter 2022. The average effective interest rate receded to 6.35% in fourth-quarter 2025 from 6.67% the previous quarter and was 41 basis points below the level 6.76% recorded a year earlier. Mortgage rates, which oscillated throughout the first six months of 2025 due partly to tariff-induced uncertainty, trended modestly lower in the second half of the year as the Federal Reserve's rate cuts ― or rather the expectations of the rate cuts ― kick-started the decline. The cumulative easing pushed the average 30-year fixed mortgage rate to a three-year low at the start of 2026 before rising in recent weeks. Entering 2026, the Fed opted to hold rates steady at its January meeting, but additional rate relief is expected later this year as softer economic growth is projected for the next 12 months. Lingering inflation risks and bond market volatility will continue to have an impact on borrowing costs, but costs should gradually come down by the end of the year, and housing affordability could see some slight improvement in the next 12 months.

The median price of an existing single-family home declined for the second straight quarter in the fourth quarter of 2025, falling 2.2 percent as market competition cooled — typical for year-end. On a year-over-year basis, California recorded its first annual price decline since the second quarter of 2023, falling 0.6 percent below the year-ago level. As the market transitions through its seasonal off-cycle, home prices may remain soft for the next couple of months but should rebound as the homebuying season begins in late March/early April. Should mortgage rates ease further and economic uncertainty diminish, housing affordability could see incremental improvement for the first quarter of 2026.

A minimum annual income of $213,200 was needed in California to afford the $5,330 monthly payment, including principal, interest, and taxes (PITI) on a 30-year fixed-rate mortgage at 6.35%. While the fourth-quarter 2025 annual required income was $23,600 below the record high set in second-quarter 2024, it still marked the 12th of the past 13 quarters with income requirements above $200,000. Monthly PITI declined modestly from both the prior quarter (-4.7 percent) and a year earlier (-4.0 percent) but remained more than double the national average — a gap that has persisted since at least 2018.

More California households (28 percent) could afford a typical condo/townhome in fourth-quarter 2025, rising from 27 percent third-quarter 2025 and 25 percent in fourth-quarter 2024. An annual income of $159,200 was required to make the monthly payment of $3,980 on the $650,000 median-priced condo/townhome in the fourth quarter of 2025.

Compared with California, more than one-third (39 percent) of the nation's households could afford to purchase a $414,900 median-priced home, which required a minimum annual income of $101,600 to make monthly payments of $2,540. Nationwide, affordability edged up from 36 percent in both the third quarter of 2025 and a year ago.

Key points from the Fourth-Quarter 2025 Housing Affordability report include:

When compared to the previous quarter of 2025, housing affordability improved in the fourth quarter of 2025 in the vast majority of counties, declining in only three and unchanged in another three. Despite prices remaining near historical highs, 47 counties posted quarter-to-quarter affordability gains, driven by lower mortgage rates, higher incomes, and softer home prices. When compared to a year ago, affordability improved in 46 of 53 counties, while prices in seven counties either declined (three) or showed no improvement (four).
Lassen (57 percent) remained the most affordable county in California, followed by Trinity (44 percent) and Tuolumne (43 percent), where roughly two out of five households could afford a median-priced home. Of all counties in California, Lassen continued to require the lowest minimum qualifying income at $56,000.
Mono County (10 percent) was the least affordable county in the state, followed by Monterey and Santa Barbara (12 percent), each requiring a minimum income of at least $226,400. San Mateo remained the most expensive, with a minimum qualifying income of $507,600—the only county above $500,000 — followed by Santa Clara ($470,800) and San Francisco ($441,200).
As borrowing costs eased late in the year, affordability improved across much of the state, though it remains historically tight. The largest year-over-year gains were in Trinity (+15 points), Humboldt (+8), and Glenn (+8), while affordability declined most in Lake (-5), Imperial (-4), and Napa (-1). Housing affordability in California stayed near its all-time low and continued to be a challenge for both buyers and sellers.

See C.A.R.'s historical housing affordability data.
See first-time buyer housing affordability data.

Leading the way…® in California real estate for 120 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with nearly 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Sacramento.

CALIFORNIA ASSOCIATION OF REALTORS^®
Traditional Housing Affordability Index
Fourth Quarter 2025

4^th Qtr. 2025	C.A.R. Traditional Housing Affordability Index
STATE/REGION/COUNTY	4^th Qtr. 2025	3^rd Qtr. 2025		4^th Qtr. 2024		Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	18	17		16	r	$869,300	$5,330	$213,200
Calif. Condo/Townhome	28	27		25	r	$650,000	$3,980	$159,200
Los Angeles Metro Area	17	16		15	r	$830,000	$5,090	$203,600
Inland Empire	24	23		21	r	$595,000	$3,650	$146,000
San Francisco Bay Area	23	22		21	r	$1,263,900	$7,750	$310,000
United States	39	36		36		$414,900	$2,540	$101,600

San Francisco Bay Area
Alameda	22	21		19	r	$1,225,000	$7,510	$300,400
Contra Costa	27	26		25	r	$860,000	$5,270	$210,800
Marin	25	22		19	r	$1,527,500	$9,360	$374,400
Napa	17	16		18		$924,000	$5,660	$226,400
San Francisco	21	22		21		$1,800,000	$11,030	$441,200
San Mateo	19	18		17		$2,070,000	$12,690	$507,600
Santa Clara	21	20		19	r	$1,920,000	$11,770	$470,800
Solano	30	26		26		$580,000	$3,550	$142,000
Sonoma	19	19		19	r	$821,000	$5,030	$201,200
Southern California
Imperial	25	26		29	r	$435,000	$2,670	$106,800
Los Angeles	13	12		12	r	$939,690	$5,760	$230,400
Orange	14	13		12		$1,396,500	$8,560	$342,400
Riverside	24	23		21	r	$633,580	$3,880	$155,200
San Bernardino	30	29		28	r	$497,000	$3,050	$122,000
San Diego	15	13		12		$994,000	$6,090	$243,600
Ventura	17	16		14		$932,500	$5,720	$228,800
Central Coast
Monterey	12	9		11	r	$925,000	$5,670	$226,800
San Luis Obispo	14	13		12	r	$905,000	$5,550	$222,000
Santa Barbara	12	12		11	r	$1,250,000	$7,660	$306,400
Santa Cruz	15	14		15	r	$1,287,500	$7,890	$315,600
Central Valley
Fresno	33	30		31	r	$430,000	$2,640	$105,600
Glenn	42	37		34	r	$342,750	$2,100	$84,000
Kern	33	31		30	r	$397,490	$2,440	$97,600
Kings	36	35	r	34	r	$370,000	$2,270	$90,800
Madera	35	32		30		$440,000	$2,700	$108,000
Merced	30	27		25	r	$420,000	$2,570	$102,800
Placer	34	31		31		$655,000	$4,010	$160,400
Sacramento	30	28		27	r	$539,000	$3,300	$132,000
San Benito	27	26		21	r	$750,000	$4,600	$184,000
San Joaquin	31	29		28	r	$540,000	$3,310	$132,400
Stanislaus	31	28		31	r	$465,000	$2,850	$114,000
Tulare	35	33		29	r	$381,500	$2,340	$93,600
Far North
Butte	30	27		28		$440,000	$2,700	$108,000
Lassen	57	52		52	r	$229,000	$1,400	$56,000
Plumas	39	30		35	r	$399,500	$2,450	$98,000
Shasta	37	35		35	r	$370,000	$2,270	$90,800
Siskiyou	39	35		36	r	$302,500	$1,850	$74,000
Tehama	39	35		37	r	$322,000	$1,970	$78,800
Trinity	44	34		29		$250,000	$1,530	$61,200
Other Calif. Counties
Amador	38	36		36	r	$420,000	$2,570	$102,800
Calaveras	39	34		35	r	$439,000	$2,690	$107,600
Del Norte	36	34		33		$379,000	$2,320	$92,800
El Dorado	32	29		27	r	$675,000	$4,140	$165,600
Humboldt	30	25		22	r	$413,000	$2,530	$101,200
Lake	31	29		36	r	$332,000	$2,030	$81,200
Mariposa	29	29		24	r	$441,000	$2,700	$108,000
Mendocino	25	26		22	r	$492,500	$3,020	$120,800
Mono	10	7		7	r	$923,000	$5,660	$226,400
Nevada	31	30		30	r	$550,000	$3,370	$134,800
Sutter	31	28		25	r	$450,000	$2,760	$110,400
Tuolumne	43	36		38	r	$380,000	$2,330	$93,200
Yolo	26	25		24	r	$622,500	$3,820	$152,800
Yuba	29	28		27		$442,750	$2,710	$108,400

r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.35% (4Qtr. 2025), 6.67% (3Qtr. 2025) and 6.76% (4Qtr. 2024).

SOURCE CALIFORNIA ASSOCIATION OF REALTORS (C.A.R.)