More Californians can purchase a home in third-quarter 2025, compared to previous quarter and a year ago, C.A.R. reports

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

Nov 06, 2025, 11:00 ET

Seventeen percent of California households could afford to purchase the $887,380 median-priced home in the third quarter of 2025, up from 15 percent in second-quarter 2025 and up from 16 percent in third-quarter 2024.
A minimum annual income of $223,600 was needed to make monthly payments of $5,590, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.67 percent interest rate.
Twenty-seven percent of home buyers were able to purchase the $649,990 median-priced condo or townhome. A minimum annual income of $163,600 was required to make a monthly payment of $4,090.

SACRAMENTO, Calif., Nov. 6, 2025 /PRNewswire/ -- Cooling market competition and an increase in available housing helped moderate home prices and allowed more Californians to buy homes in the third quarter of 2025, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Infographic: https://www.car.org/Global/Infographics/HAI-2025-Q3

Cooling market competition and an increase in available housing helped moderate home prices and allowed more Californians to buy homes in the third quarter.
of 2025. — Cooling market competition and an increase in available housing helped moderate home prices and allowed more Californians to buy homes in the third quarter. of 2025.

Seventeen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2025, up from 15 percent in the second quarter of 2025 and up from 16 percent in the third quarter of 2024, according to C.A.R.'s Traditional Housing Affordability Index (HAI). Housing affordability in California stayed near its all-time low and continued to be a challenge for both buyers and sellers.

The third-quarter 2025 figure is less than a third of the affordability index peak of 56 percent in the third 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 mortgage interest rate declined for the second consecutive quarter, nearly reversing the growth experienced over the last year. The average effective interest rate receded to 6.67 percent in third-quarter 2025 from the previous quarter (6.90 percent) and slightly above a year ago (6.63 percent). Mortgage rates had oscillated through the first half of the year amid tariff-induced uncertainty, but have reached the lowest level in a year, despite a mild bounce back after the Federal Reserve's October decision to cut its benchmark rate by 25 basis points to 3.75% from 4.00%. The Fed is prepared to cut rates further in response to a cooling labor market, but elevated tariff rates will likely put upward pressure on inflation, which could prevent the U.S. central bank from easing its monetary policy too quickly. As such, while borrowing costs may remain lower in the short term, interest rates could fluctuate in the months ahead, creating a complex backdrop for would-be buyers when contemplating their home purchase timing or financing strategies.

The statewide median home price moderated in the third quarter of 2025 as market competition eased and housing supply improved, leading to slower price growth. Although mortgage rates edged down during the quarter, borrowing costs remained near record highs. The monthly payment for a median-priced home, including taxes and insurance, fell 3.8 percent from the previous quarter but was still 1.3 percent higher than a year earlier, reflecting a slight year-over-year increase in the effective mortgage rate.

A minimum annual income of $223,600 was needed to qualify for the purchase of a $887,380 statewide median-priced, existing single-family home in the third quarter of 2025. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,590, assuming a 20 percent down payment and an effective composite interest rate of 6.67 percent.

The statewide median price of existing single-family homes in California fell 2.0 percent in the third quarter of 2025 compared to the previous quarter, reflecting a cooling in market competition. However, on a year-over-year basis, home prices rebounded — rising 0.8 percent after posting the first decline in eight quarters earlier this year — as easing mortgage rates encouraged more buyers to return to the market. With the market transitioning into the off-season, home prices are expected to moderate further as seasonal factors kick in. If lower mortgage rates materialize in the months ahead and economic uncertainties subside, housing affordability could see some slight improvement in the next couple of quarters.

More California households (27 percent) could afford a typical condo/townhome in third-quarter 2025, rising from 25 percent both in second-quarter 2025 and in third-quarter 2024. An annual income of $163,600 was required to make the monthly payment of $4,090 on the $649,990 median-priced condo/townhome in the third quarter of 2025.

Compared with California, more than one-third (36 percent) of the nation's households could afford to purchase a $426,800 median-priced home, which required a minimum annual income of $107,600 to make monthly payments of $2,690. Nationwide, affordability edged up from 35 percent in both the second quarter of 2025 and a year ago.

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

When compared to the previous quarter, housing affordability in third-quarter 2025 declined in 10 counties and was unchanged in five. Although prices remained near all-time highs, 38 counties showed quarter-to-quarter improvement in affordability as a result of slightly lower mortgage rates, higher income and softer home prices. When compared to a year ago, affordability improved in three out of five counties across the state, with affordability improving in 32 counties, while 21 either declined (11), or showed no improvement (10).
Lassen (52 percent) remained the most affordable county in California, followed by a two-way tie between Amador and Tuolumne at 36 percent, where a little over one out of three households in those counties able to afford to purchase the median-priced home in their respective county. Of all California counties, Lassen continued to require the lowest minimum qualifying income ($64,800) to purchase a median-priced home in third-quarter 2025.
Mono (7 percent), was the least affordable county in the state, followed by Monterey (9 percent) and a two-way tie at 12 percent between Los Angeles and Santa Barbara, with each of those counties requiring a minimum annual income of at least $240,400 to purchase a median-priced home. San Mateo (18 percent) continued to require the highest minimum qualifying income ($524,000) to buy a median-priced home and once again was the only county requiring a minimum qualifying income of more than $500,000. Santa Clara (19 percent) came in second and San Francisco (22 percent) came in third with a minimum required income of $482,400 and $409,600, respectively.
Borrowing costs at near-all-time highs remain a hurdle for improvements in housing affordability in many parts of the state. In the third quarter of 2025, the housing affordability index of 20 counties tracked by C.A.R. either remained unchanged or declined from the like quarter a year ago. Lassen (29 percent) experienced the biggest year-to-year drop, falling six percentage points. Tuolumne (36 percent) came in second with a five-point decline, while Glenn (37 percent) and Tehama (35 percent) followed closely, with each dipping three points below the same quarter of last year. Despite improving from a year ago, housing affordability remained 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 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
Third Quarter 2025

Qtr. 3 2025	C.A.R. Traditional Housing Affordability Index
STATE/REGION/COUNTY	Qtr. 3 2025	Qtr. 2 2025		Qtr. 3 2024		Median Home Price	Monthly Payment Including Taxes & Insurance	Minimum Qualifying Income
Calif. Single-family home	17	15		16		$887,380	$5,590	$223,600
Calif. Condo/Townhome	27	25		25		$649,990	$4,090	$163,600
Los Angeles Metro Area	16	14		15		$837,060	$5,270	$210,800
Inland Empire	23	21		22		$595,000	$3,750	$150,000
San Francisco Bay Area	22	20		21		$1,295,000	$8,150	$326,000
United States	36	35	r	35		$426,800	$2,690	$107,600

San Francisco Bay Area
Alameda	21	19		18		$1,250,000	$7,870	$314,800
Contra Costa	26	23		25		$860,000	$5,420	$216,800
Marin	22	19		20		$1,612,500	$10,150	$406,000
Napa	16	15		15		$940,000	$5,920	$236,800
San Francisco	22	19		21		$1,626,500	$10,240	$409,600
San Mateo	18	16		17		$2,080,000	$13,100	$524,000
Santa Clara	19	17		19		$1,915,000	$12,060	$482,400
Solano	26	27		26		$606,000	$3,820	$152,800
Sonoma	19	17		18		$825,780	$5,200	$208,000
Southern California
Imperial	26	27		28		$418,500	$2,640	$105,600
Los Angeles	12	13		11		$954,130	$6,010	$240,400
Orange	13	12		12		$1,400,000	$8,820	$352,800
Riverside	23	21		21		$625,000	$3,940	$157,600
San Bernardino	29	29		29	r	$497,800	$3,130	$125,200
San Diego	13	13		12		$1,009,500	$6,360	$254,400
Ventura	16	14		13		$926,000	$5,830	$233,200
Central Coast
Monterey	9	10		10		$1,001,500	$6,310	$252,400
San Luis Obispo	13	12		11		$929,350	$5,850	$234,000
Santa Barbara	12	10		13		$1,220,000	$7,680	$307,200
Santa Cruz	14	14		14		$1,304,220	$8,210	$328,400
Central Valley
Fresno	30	30		30		$443,000	$2,790	$111,600
Glenn	37	39		40		$365,500	$2,300	$92,000
Kern	31	30		30		$400,000	$2,520	$100,800
Kings	34	34		33		$377,000	$2,370	$94,800
Madera	32	31		31		$446,750	$2,810	$112,400
Merced	27	26		27		$427,250	$2,690	$107,600
Placer	31	30		30		$675,000	$4,250	$170,000
Sacramento	28	27		26		$550,000	$3,460	$138,400
San Benito	26	22		21		$750,000	$4,720	$188,800
San Joaquin	29	26		25		$545,000	$3,430	$137,200
Stanislaus	28	26		29		$485,000	$3,050	$122,000
Tulare	33	30		31		$380,000	$2,390	$95,600
Far North
Butte	27	24		29		$461,000	$2,900	$116,000
Lassen	52	46		52		$257,500	$1,620	$64,800
Plumas	30	34		23		$466,500	$2,940	$117,600
Shasta	35	33		34		$375,000	$2,360	$94,400
Siskiyou	35	37		36		$329,500	$2,070	$82,800
Tehama	35	29		38		$341,500	$2,150	$86,000
Trinity	34	30		34		$302,480	$1,900	$76,000
Other Calif. Counties
Amador	36	35		38		$437,500	$2,750	$110,000
Calaveras	34	33		31		$472,000	$2,970	$118,800
Del Norte	34	29		28		$384,000	$2,420	$96,800
El Dorado	29	27		27		$690,000	$4,340	$173,600
Humboldt	25	23		23		$446,620	$2,810	$112,400
Lake	29	34		35		$358,250	$2,260	$90,400
Mariposa	29	26		27		$425,000	$2,680	$107,200
Mendocino	26	20		18		$470,000	$2,960	$118,400
Mono	7	8		7		$1,079,000	$6,790	$271,600
Nevada	30	27		26		$550,000	$3,460	$138,400
Sutter	28	27		28		$455,000	$2,860	$114,400
Tuolumne	36	38		40		$430,000	$2,710	$108,400
Yolo	25	22		24		$620,000	$3,900	$156,000
Yuba	28	26		27		$437,000	$2,750	$110,000

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.67% (3Qtr. 2025), 6.90% (2Qtr. 2025) and 6.63% (3Qtr. 2024).

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