California housing affordability improves from third-quarter 2025 and a year ago, C.A.R. reports
- 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
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
4th Qtr. 2025 | C.A.R. Traditional Housing Affordability Index | |||||||
STATE/REGION/COUNTY | 4th Qtr. | 3rd Qtr. | 4th 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.)
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