Why this matters: Real estate agents and brokers just observed a disappointing spring sales bounce after years of substandard home sales since the 2021 pandemic buying frenzy. Buyers lost purchasing power to the highest mortgage rates in 15 years and backed off from buying. In turn, inventories of property for sale have and will continue to pile up rapidly – until sellers drop asking prices or get out of the market.
Current home sales
In June 2025, California saw 24,474 escrows close for new and resale home transactions. Sales volume in June hovered at the same rate as one year earlier.
Importantly for trends, year-to-date (YTD) sales volume through June 2025 held steady and did not change from a year ago. Compared to 2019 — the last normal year before the economic tsunami of the 2020 pandemic — 2025 sales volume YTD is 25% lower. A real estate recession by most standards, the pandemic years being a period of financial anomalies.
Recent home sales trends
Consider that annual home sales experienced a 6% increase from 2023 to 2024. More critically, sales volume in 2024 was 27% below 2019 — the last year in the past sales cycle.
Understand that the homebuyers available for 2023 were cannibalized in 2021 by incentives in the pandemic-driven buying spree. The buyers of foreseeable future years are waiting to sense the decline in pricing is over when prices bottom and begin to rise. Be aware your buyer today knows their math for income-to-mortgage leveraging, thanks to readily available insight.
The developing public uncertainty about political upheaval, trade taxes and immigration damps down owner and tenant turnover, and thus sales volume.
Today’s sales volume strikes at pricing
Watch for home sales volume to trail off by the end of 2025, after what became a lackluster annual spring bounce in sales numbers.
When home prices decline across all pricing tiers, not just the high tier as is underway, recent homeowners with little down payment can only watch as the equity in their home slides underwater. This pricing-to-mortgage crossover event is not likely to begin until a nationwide economic recession brings on a further drop in the number of Californians employed. Also, keep an eye on the slow long-term upward trend from very low rates of mortgage foreclosures as a force compelling owners to sell in the future.
Expect the current real estate recession to eventually bring about a return of real estate speculators to produce a “dead cat” bounce in both sales volume and pricing. Within 12 months following the speculator-driven market bounce, home prices historically slip as homebuyers wait and watch, then bottom within a year. It is then that a sustainable sales volume and pricing recovery takes over with the return of end-user homebuyers – and temporarily lower mortgage rates.
Updated July 2025.
Chart 1
Chart update 7/28/25
June 2025 | June 2024 | YoY change | |
| California home sales volume | 24,474 | 24,158 | +1.3% |
Home sales fluctuate from month to month for a variety of reasons, all worth an agent taking time to consider them. The most significant reason is the volatility of homebuyer demand. Several factors constantly at work moving the California homebuying market include:
- seasonal motivational differences, an annual cycle [see Chart 2];
- job market fluctuation;
- mortgage interest rate movement;
- home pricing sought by sellers;
- investor and speculator opportunity perceptions;
- negative equity property financials;
- turnover rates for tenants and owners; and
- homebuyer saving rates.
Seasonal differences in annual sales volume
It’s normal for home sales volume to rise in the first half of the year and fall after peaking around June.
Chart 2
Chart 2 shows average home sales volume experienced from 2011-2018, the recovery period following the Great Recession. As depicted, the month with the most homes sold monthly during a year close escrow in June. Another upturn takes place in December, as homebuyers seek to wrap up their financial activities before the end of the year.
Real estate agents need not fuss when they hear of falling month-to-month sales volume in the latter half of the year. It is the normal cycle of seasonal progression taking place. What to watch for is year-over sales, to compare one month this year to the same month last year or compare another period such as year-to-date to best see a trend.
As a rule, current market activity, whether up or down, is reflected first in sales volume, followed in nine to 12 months by same-direction price adjustments.
Chart 3
Chart update 7/28/25
| 2024 | 2023 | Annual change | |
| Annual home sales volume | 274,552 | 260,189 | +5.5% |
To set the stage for a forward look, a review of sales volume in the recent past is helpful:
- 2018 saw sales volume decrease rapidly in the fourth quarter, ending the year 4% below 2017;
- 2019 home sales volume decreased slightly from the prior year;
- 2022 home sales volume peaked early in March and lost all ground gained in the pandemic year of 2021, ending the year 24% below 2021, but only 12% below 2019, the last “normal” year for home sales before the pandemic upended market dynamics;
- 2023 home sales lost a further 22% over the prior year, the further result of buyers pulled forward to buy in 2021; and
- 2024 home sales stabilized from the prior year, suggesting the ripple effect from pandemic economics may be behind us.
- 2025 will likely slip to end up in a downward trend year over, as forecast in the dashed column above.
Chart 4
Chart update 7/28/25
| June 2025 | June 2024 | June 2023 | |
| Home sales volume year-to-date | 132,983 | 133,377 | 154,034 |
Year-to-date (YTD) home sales volume in 2025 was substantially the same as the year prior. As of June 2025, YTD home sales volume is 0.3% below a year earlier. Compared to 2019 (the last “normal” year for housing before the Pandemic Economy took over), home sales volume YTD is 25% lower in 2025 as of June, the present trend in sales volume going into 2026.
Home sales volume remains stagnant in 2025, due to:
- high mortgage rates lowering homebuyer ability to pay seller asking prices;
- a consistent level of all-cash buyers undeterred by interest rates;
- home inventory available for sale across the state increasing rapidly; and
- the real estate recession, yet to be declared, but well underway throughout our real estate markets since mid-2022.
Home sales in the coming years
The forward trend in California home sales is one of caution and delay for both buyers and sellers. Homebuyer income is growing but only keeping up with inflation, better than the pace during the decade preceding the pandemic.
These increases were not enough to catch up much less keep up with rising house prices, now far above the mean price trendline. The upcoming necessary price adjustment will be especially resisted by sellers’ pricing stubbornness, known as the sticky pricing phenomenon. Many sellers in a devalued real estate market which mandates a reset of asking prices will withdraw their property from the inventory for sale as prices trend lower.
firsttuesday forecasts annual home sales volume will not remain the same or similar to 2024 in the 2025-2026 period, and that the slipping will accelerate. The decline is the result of the tandem high levels of both asking prices and mortgage rates. One or the other, but not both can run vertically in the same direction as buyers then cannot buy.
The timeline for a real estate turnaround is faced with complications not experienced in recent decades. Government trade wars are raising the cost of domestic and imported materials compounded by the federal attack on the necessary migratory labor force for construction and maintenance of a home and household. Additionally, these complications are a broadly based interference with our keeping the California economy the fourth largest in the world.
The competitive broker
What’s a broker reliant on home sales to do until home sales volume becomes abundant again?
SFR brokers and agents might consider adding transaction-related services to supplement their income. Those who do add related services will restructure their practice as “all-service brokers.” Transaction-related services integrated into an office operation will help maintain solvency and position the office for growth.
Related article:
Can you be any more specific about the effect of rising interest rates on prices ‘expected’ in 2016? In other words buying now in 2015 would one expect to be underwater in a few years depending on the change in rates?
Ann,
Thank you for your inquiry! Historically speaking, when mortgage rates rise homebuyers become discouraged and sales volume declines, usually within six months. As sales volume falls back, home prices likewise fall within the following 9-12 months. Therefore, first tuesday expects pricing to decline in 2017.
However, to answer your question about underwater homes, prices aren’t expected to fall very far in 2017, nor will they be down for long. Economic action is pointing towards a solid recovery beginning in 2018, and by that point we will likely be heading into our next housing boom, expected to occur in 2019-2021. Therefore, if a home goes underwater due to decreased home prices in 2017, it will likely regain positive equity quickly.
Please read more about the anticipated rise in mortgage rates here: Why fixed mortgage rates won’t rise (yet), despite Fed action. You may also read specifics about our forecast for the real estate market here: California real estate almanac: past and future.
Regards,
ft Editorial
Are there any granular data regarding shadow inventory? How much percentage are true speculator or flippers, and how much are for parking their money as safe investment comparing to their home country, ie. China? What about the institutional purchase of foreclosure properties? do they rent out those properties, or resell at a later time,? These unknown forces have disrupted California real estate market for the last few years and partially blame for inflating home prices.
Dave,
CoreLogic provides information on the percentage of absentee buyers and real estate owned (REO) properties.
CoreLogic also provides data on shadow inventory occasionally. To the best of our knowledge, their latest report is here: A new source of shadow inventory.
For information on investors from China, please see our article: Chinese stock market crash motivates investors: true or false?
To read more broadly about foreign investors in California’s real estate market, see: The global economy’s effect on local real estate.
Thank you for your question!
ft Editorial Staff
Does the analysis reflect any concern for the impact the California drought may have on housing activity / home prices over the next several years?
Can’t believe that we are in the worst threatening situation in the state’s history and this article refuses to recognize that buyers will not purchase a home if:
They have much higher water bills
Water restrictions
Water penalties
Water brown outs
or no water at all
What is the world does the author think is happening all over the state. There is only one last chance and that is El Nino this winter. If that doesn’t yield mega results in rain and snow, then all bets are off and so is California because it most likely is in a mega drought.
I’ve thought about the drought effect…and I’m torn between two scenarios: One, the state will suffer economically, and eventually have a negative impact on real estate prices. Two, cities will heavily restrict growth because of our severe drought. Scenario 2, to me, is the most likely, and that would DECREASE inventory compared to population growth leading to even higher R/E prices. While it is true that water is a tremendous issue, I see people willing to let their lawns go completely dead and perhaps skip showers to live here in Southern Cal…it’s crazy, and it probably always will be. Then again, there was the collapse of 2008. Who is sage enough to figure this out?
WRONG!
Absolutely wrong analysis. I have been a broker
for 34 years in Los Angeles. This post is so far removed
from reality I could write a book tearing it apart.
Why don’t you people give up forecasting real estate prices ?
You have NEVER BEEN RIGHT. NEVER.
AGREED.
So what is your forecast ?
Thank you for this informative, in depth analysis. This data is very helpful when trying to put current local market data in perspective.
Its all about location. Here in the Bay Area, housing sales are out of control once again with multiple offers and homes selling within days of listing. I’d like to see the chart for this area specifically. Of course other (inland) areas suffer massively and will continue until as you said, employment expands greatly and regularly. But there’s magic in the Bay Area and specific smaller locations.
Thank you very much for the information on house market trend as well as brokers and real estate agents fall.
stella song
You list your source as MDA DataQuick. If you will check with DataQuick, you will find they are no longer owned by MDA. It’s always nice to properly reference your sources.
It is indeed! Thanks for bringing this change to our attention. We’ll see to it that our attributions are updated accordingly.
Always great information!
Thanks much!!
My thanks to Bradley for the research and information provided in the article. Historic trends lend themselves to greater understanding of the factors involved in the movement of markets. I went straight from this article to investigate the “charts” section. Good information–leads to good insight. Susan Carter
It seems at this point that the trend was downward but since January things have picked up. When the interest rates were lowered the housing market jumped a bit and since has leveled off just as interest rates have.
ft Editorial Staff:
Thanks for the invaluable lists of important facts that will direct the business decisions of Real Estate Brokers over the coming years. All of your journals are spot-on subjects for surviving this current R. E. Cycle. But this journal gives the lists that a Broker will need when making a business plan. I am studying for my Broker’s Test now.
Sincerely, Ed Reisinger