Housing affordability in California reaches a four-year high in first-quarter 2026, C.A.R. reports

Declining interest rates and falling home prices made it possible for more Californians to afford a home purchase.

• Twenty-two percent of California households could afford to buy an $843,390 median-priced home in the first quarter of 2026, up from 21 percent in fourth-quarter 2025 and up from 19 percent in first-quarter 2025.
   
• A minimum annual income of $204,800 was needed to make monthly payments of $5,120, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 6.24 percent interest rate.
   
• Nearly one-third (32 percent) of home buyers were able to afford a condo or townhome at a median price of $648,000, requiring a monthly payment of $3,930 and a minimum annual income of $157,200.

SACRAMENTO, Calif., May 7, 2026 /PRNewswire/ -- Housing affordability in California continued to climb in the first quarter of 2026, reaching its highest level in four years, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2026-Q1

Twenty-two percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in the first quarter of this year, an increase from 21 percent in fourth-quarter 2025 and 19 percent from the first quarter of 2025, according to C.A.R.'s Traditional Housing Affordability Index (HAI).

A minimum annual income of $204,800 was required to make the monthly payment of $5,120, including principal, interest, and taxes (PITI) on a 30-year fixed-rate mortgage at 6.24 percent in California. The minimum income required in first-quarter 2026 was $32,000 lower than the record high reached in second-quarter 2024, and it was the 13^th time in the past 14 quarters that the minimum required income exceeded $200,000. The monthly PITI for a typical single-family home in California declined moderately from both the previous quarter (-3.9 percent) and the same quarter of last year (-6.1 percent). The statewide PITI remained more than double the national level in the first quarter of 2026, continuing a trend that has persisted since at least 2018.

Lower interest rates, slower price growth, and higher household income levels all contributed to the upward trend in housing affordability in the first quarter of 2026. 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 statewide median price of a detached, existing single-family home in California declined 3.0 percent to $843,390 on a quarter-to-quarter basis for the third consecutive period in first-quarter 2026, as housing demand slowed amid lingering market uncertainty. On an annual basis, California recorded its first price decline since mid-2023, as the statewide median price dipped 0.5 percent from the first quarter of 2025.

Since the outbreak of the Iran war in late February, mortgage rates have been notably volatile, reversing lower rates seen earlier in the year. Rates initially jumped as the war pushed oil prices higher and reignited inflation concerns, lifting Treasury yields that mortgage rates closely track. The average 30‑year fixed rate rose from just under 6 percent before the conflict to over 6.6 percent by late March as markets priced in higher energy costs and a more cautious Federal Reserve outlook. Mortgage rates have remained elevated and volatile, reacting more to geopolitical tensions and their impact on inflation than to typical market forces.

At 32 percent, the share of California households that could afford a typical condo or townhome in the first quarter improved from 31 percent in the fourth quarter of 2025 and 27 percent in first-quarter 2025, as the median price dipped slightly on quarterly and annual basis. A minimum annual income of $157,200 was needed to make monthly payments of $3,930 on a $648,000 median priced condo/townhome in first-quarter 2026. It was the second straight month that the condo/townhome PITI remained below $4,000.

For the ninth consecutive quarter, the minimum required annual income to purchase a median-priced U.S. home was less than half that of California's. In the first quarter of 2026, the median U.S. home price stood at $404,300, which required a minimum annual income of $98,000 to make monthly payments of $2,540. Nationwide, affordability improved to 44 percent, up from 42 percent in the fourth quarter of 2025 and 40 percent a year ago. As the market enters the home buying season, home prices will continue to inch up, but the growth pace will remain soft in the coming months. With mortgage rates moving sideways or even rising in the weeks ahead, housing affordability could drop slightly in the next two quarters if the Iran conflict remains unresolved.

Key points from the first-quarter 2026 Housing Affordability report include:

• Compared to the previous quarter, housing affordability in the first quarter of 2026 improved in less than half of all counties tracked by C.A.R, while 19 counties recorded affordability declines, and was unchanged in 11 other counties. Twenty-three counties posted quarter-to-quarter gains, driven by lower mortgage rates, higher incomes, and softer home prices. When compared to a year ago, affordability improved in 48 of 53 counties, dropped in three, and showed no improvement in two.

• Lassen (61 percent) remained the most affordable county in California, followed by Plumas (45 percent) and Glenn (44 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 $52,800.

• Mono (6 percent) was the least affordable county in California, followed by Santa Barbara (12 percent) and Monterey (15 percent), with each county requiring a minimum income of at least $219,200. San Mateo (20 percent) continued to post the highest minimum qualifying income at $534,400, the only county with an annual income requirement above $500,000. Santa Clara ($492,800) required the second highest annual income, and San Francisco ($479,600) required the third highest.

• As mortgage rates dropped over the past year, affordability improved across much of the state. The biggest year-over-year gainers were Mendocino (+9 points), Madera (+7 points), Plumas (+7 points), and Tehama (+7 points). Few counties moved in the opposite direction; however, affordability dropped the most in Trinity (-3 points), followed by Sutter (-2 points) and San Francisco (-2 points). Despite improvements from a year ago, housing affordability remains low and continues to pose challenges for both buyers and sellers in many counties in California.

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