Why this matters: Real estate agents and brokers in 2026 are observing a fourth year of persistent substandard home sales volume, as ripples from the pandemic stimulus frenzy plateau. In 2025 as FRM rates dropped over 80 percentage points, additional buyers did not come forward. Meanwhile FRM rates in 2026 erupted again, inventories of property for sale grew, and will build up with a vengeance until rates or home prices greatly reside.
Homes for sale meet disincentivized buyers
In August 2026, California saw 23,600 escrows close for new and resale home transactions. Sales volume in August dropped 1.8% below the same month one year earlier.
Importantly for trends, year-to-date (YTD) sales volume through August 2026 only rose 0.2% from the 2025 YTD sales figure. This continues a fourth year of flat to weak sales volume, with evolving aggressive consumer inflation reflected in both FRM and ARM rates, and static property pricing insufficient to attract willing buyers.
Job uncertainty and insidious effects from trade and military wars are inducing caution to freeze owner turnover and home building.
Recent home sales trends
Critically, annual sales volume during these four years was 28% below 2019 — the last year in the pre-pandemic sales cycle of ten years with similar sales volume to 2019.
Today, most buyers are waiting until they sense the decline in pricing has passed, evidenced by prices hiting a trough and begining to rise. Be aware your typical homebuyer today knows their math for income-to-mortgage leveraging to set home pricing, thanks to readily available insight.
The developing public uncertainty about political upheaval, trade taxes and immigration hostilities — and then a war — tamps down owner and tenant turnover, and thus sales volume. The property sales volume will suffer from this buyer status quo-type rigor mortis until speculators turn to the real estate market and stop prices from dropping.
Sales volume strikes at pricing
Watch for home sales volume to trail off going into 2027. The U.S. is shifting into an economy not unlike the mid-1960s and mid-1980s stemming from a heightened focus on resetting the military-industrial complex for a war economy which instantly suppresses user turnover.
When home prices decline across all pricing tiers, not just the high tier now underway, recent homeowners with little down payment can only watch as the equity in their home slides underwater. This price-to-mortgage crossover event into negative equity ownership 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 upward trend currently underway with mortgage foreclosures, a force increasingly compelling owners to sell.
Sales agents can expect the current real estate recession to eventually bring about a return of real estate speculators after prices drop. Speculator acquisitions 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 — as prices bottom during that period. 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 returning for lack of investment opportunities.
Updated October 2026.
Chart 1
Chart update 9/24/26
August 2026 | August 2025 | YoY change | |
| California home sales volume | 23,600 | 24,100 | -1.8% |
*Data is compiled from Zillow’s sales count on all homes including SFR’s, condominiums and co-operative ownership. Information is gathered from all Metropolitan Statistical Areas (MSA’s) within California.
Home sales fluctuate from month to month for a variety of reasons, all worth an active agent taking time to consider. 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 sales cycle producing the spring bounce [see Chart 2];
- job market fluctuation;
- mortgage interest rate movement;
- homebuyer saving rates;
- home pricing sought by seller agents;
- turnover rates for tenants and owners;
- negative equity property financials; and
- investor and speculator opportunity perceptions.
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 the 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. To best see a trend watch for year-over sales by comparing:
- recent months this year to the same months last year; or
- the year-to-date period with the same period last year
As a rule, current market activity, whether up or down, is reflected first in sales volume, followed in nine to 12 months by price adjustments in the same direction.
Chart 3
Chart update 9/24/26
| Forecast 2026 | 2025 | 2024 | 2023 | Annual change | |
| Annual home sales volume | 273,000 | 277,100 | 275,300 | 266,400 | +0.1 |
Editor’s note — In the chart above, firsttuesday forecasts 2026 to end below the home sales volume in 2025, based on current sales trends.
To set the stage for a forward look, a review of sales volume in the recent past is helpful:
- 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 stimulus upended market dynamics;
- 2023 home sales volume lost a further 22% over the prior year, the consequence of buyers pulled forward to buy in 2021 using historically low mortgage rates for funding;
- 2024 home sales stabilized from the prior year, suggesting the end of the ripple effect from pandemic economics;
- 2025 continued the stagnant sales trend of the prior two years; and
- 2026 matches the slow sales pace of 2025 going into the fall, which is expected to decrease further as international conflict and the highest FRM rates since the pandemic causes buyers to rethink large purchases and costly mortgage debt.
Chart 4
Chart update 9/24/26
| August 2026 | August 2025 | August 2024 | |
| Home sales volume year-to-date | 186,200 | 185,700 | 185,700 |
Year-to-date (YTD) home sales volume through August 2026 was substantially the same as the year prior. As of August 2026, YTD home sales volume is 0.2% above a year earlier. Compared to 2019, home sales volume YTD is 28% lower in 2026 as of August. 2019 was the last “normal” year for property transactions before the pandemic economy took over.
The present annual trend in sales volume is flat, but is expected to decline for the remainder of the year, due to:
- job uncertainty in the wake of the US-Iran War effort and trade wars disrupting the rate of job growth;
- high mortgage rates rising to reduce homebuyer ability and willingness to pay seller asking prices;
- a consistent quantity of all-cash buyers undeterred by interest rates or asking prices;
- reluctance of sellers to reduce asking prices to offset high mortgage rates and incentivize buyers;
- buyer agent failure to advise buyers to disregard asking prices and make offers at prices they qualify to pay;
- a steadily increasing inventory of property available for sale across the state causing buyers to wait before making a selection; and
- the real estate recession, yet to be declared, but four years underway throughout California.
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 just above the rate of inflation, much improved from the less-than-inflation pace during the decade preceding the pandemic.
While wage increases caught up with consumer inflation, they were nowhere near enough to catch up with pandemic-peak home prices and post-pandemic mortgage rates. Home prices remain far above the mean price trendline, but the gap is narrowing as property prices run flat and wages increase.
The necessary price adjustment required to bring buyers to the table is resisted by sellers’ pricing stubbornness, known as the sticky pricing phenomenon. The likely result is continuing the post-2022 plateau of flat pricing that will meet up with the rise in the mean price trendline rather than prices dropping going into 2027 and its spring bounce.
firsttuesday forecasts annual home sales volume for 2026 will slip slightly from the level in 2025, as buyers continue to wait on the sidelines. The sales slump in 2026 will be the result of the tandem high or still rising levels of asking prices, mortgage rates and financial caution.
Sellers are also competing against the rising strain of buyers comparing the high monthly cost of ownership and the lower declining rent rates charged by landlords for similar housing — which reduces turnover and transactions.
The timeline for a real estate turnaround faces complications not experienced in recent decades. Government trade wars are raising the cost of both domestic and imported construction materials. Costs of owning real estate are compounded by the federal attack on the necessary migratory labor force for construction and maintenance of households. And now another American war in the Middle East with no end yet in sight.
The competitive broker
What’s a broker reliant on home sales to do until home sales volume provides abundance again?
SFR brokers and agents might consider adding transaction-related provider services to supplement their income in the present buyer’s market. Those who do add related services — provided only when the client signs a representation agreement — will restructure their practice as “all-service brokers.”
Transaction-related services originate primarily due to representing buyers, not sellers. When an office operation includes any of the services offered by providers to buyers, their agents maintain a standard of living, remain solvent and position the office for eventual growth. Notary, anyone? MLO? Property management? Home insurance?
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The wisest policy for growth has been shot down over and over. The idea is logical: require higher density building around transportation hubs. Incentivize more people to use public transport. Reduce wasteful commuting and expansion of the highway system. Blaming low inventory on regulations is a shallow, threadbare shibboleth. Developers want tax breaks, freedom to cut corners, and the right to ignore environmental impacts. They are not victims. Californians who move to Texas will not put up with the Medieval regime of the extreme right, the destruction of marsh lands, and the flooding that results when concrete covers every available space. They will not put up with the backward assault on women’s rights. California is still the nation’s innovation hub. California is moving forward, and rumors of its demise are just plain wrong.
There’s always speaks and valleys in housing and consumer cycles. sometimes people make more income and other times they don’t,some of it does have to do with wealthier people overpaying for homes on the coast.
I had some horrible experiences with Real Estate agents in the past, therefore would never sign an exclusive right to buy with an agent. So, if an agent insist I do that, I would just carry on to the next agent and first agent would lose a potential sale with me.
Treat me right, and I will treat you right.
Too many hungry agents out there for me to need you.
I learned the hard way.
That’s really how other Virginia Ganskie agents exploit us just to sell. but someone recommended my agent and he was also an advisor and I witnessed how sincere he was. not only so that he can sell but he also wants to satisfy his client and be happy.
Please update the article, it has stale information.
so im thinking to hold onto my fathers house til 2024? looks like market is spiraling slowly to me and if i sold now id take a loss…
Inventory is climbing, but very slowly because California makes it SO hard and SO expensive. The permit fees, the school fees and their processes are not reasonable. They make it so hard for contractors to turn a profit because they want it all. It’s very discouraging and demoralizing to many small and mid-sized residential builders. In some cases they want nearly twice the value of a given lot, just in permit fees. So a guy might look at a lot, and think… okay, that lot is probably worth $150k, building costs, escrow/title, etc…, and they might think they can turn a reasonable profit for their time and risk. But wait… then the government comes in and tells them they want upwards of $60,000 or more…. there goes all of the builder’s profit and there goes another house that CA needs. Instead of worrying about rent control, I cannot understand why CA doesn’t just make it easier and more affordable… they already get so much in property taxes. Why do they have to take so much from each house BEFORE it even gets built. Very exasperating….
You really have to wonder with all the aggressive lending 5-percent down up to $2.5 million, second mortgages making a come back at higher loan to values, and no tax returns loans down to 500 credit scores that when sales volume decreases it’s an ominous sign.
January 2008 was not in the midst of a great recession. The recession didn’t start until fall of 2009.
Everything is very open with a very clear
clarification of the issues. It was definitely
informative. Your site is extremely helpful. Thank you for sharing!
Great Article, it is great to know what the statistical data says but statistics are interpreted in multiple ways. Owning a home is an individual choice in response to individual circumstances and needs so sales continue regardless of what the market is doing. If people were willing to once pay rates upwards of 10% to own a home, they’ll continue to do so, especially now with rates still under the highest average rate of 6.19% according to another “statistic”, rents continue to rise, most new construction are apartments and live/work developments where everyone it’s crowded living, people want their own piece of America. Many people are also taking advantage of higher loan limits in high cost areas $679,650 and Down Payment Assistance Programs that cover the down payment and closing costs up to that amount, without having to be a first time buyer!!
Is there a difference between Northern and Southern California markets concerning vulnerability? I have been under the impression that if the economy dips, SoCal prices drop sooner and faster than NorCal prices because there is more supply down there. Isn’t that what happened in the early 90s? And is the desert more vulnerable than the rest of SoCal?
I ask because we are hoping that our home in the Sacramento-Tahoe region will hold its value and that the desert prices will drop first so we can retire to Palm Springs with an advantage. We would like this to happen in about 5-8 years from now.
This next crash is coming much sooner than 5-8 years…
When the Governor, himself, plans to ration water to 50 gallons a day per person, can you really expect people to pay premium prices to live in such a state? A man made drought dries up home sales and the California economy
There was a decline, starting in 2008, along the I-5 corridor of the Central Valley, as environmental issues effected home sales. The shut down of the Harvey O. Banks Pumping Plant, which delivered water for 400 miles of homes and farmland created housing market chaos as over 50 towns lost water for showers and toilets, businesses, hospitals, schools and prisons. Unemployment increased to 40%. (Search online , Dead Harvest, Devin Nunes for details) Valley Farm prices and land values predictably dropped, as water prices increased to $2000 per acre foot.
Dust bowl conditions and migration out of the valley continued as the Federal government, faced with litigation, turned the problem over to the State. Major cities found lower cost housing prices rising due to an influx of displaced agricultural workers and industries. As the state’s tax base eroded, necessary college tuition increases created more interest in low cost rental properties in campus cities.
Shortages of low cost rental property and homes, including trailer parks developed as an influx of new immigrants pushed moderate cost homes to continue raising in value in the major cities. Wild fires, made possible by laws controlling the clearing of underbrush, effected populations along the mountain ranges and in the northern portions of the state.
Displaced home owners were greeted with a housing shortage and increased prices. Drug cartels attempting to control marijuana farms also contributed to the fire danger. The northern portions of the state, were affected by mandated water control issues, while, at the same time, dams and reservoirs were removed to limit hydroelectric production and promote the state’s goal of windmills and solar panels sales. The mandated requirement for homes to buy into solar panels prior to resales, pushed prices up.
Laws requiring state wide rationing of drinking water in less than 2 years will have a predictable impact. The newly mandated water divisions, recently mapped by Sacramento, with ability to add unlimited taxes on properties, within these divisions, should impact home sales between L.A. and San Francisco along the coastal valley and Salinas River. The scheduled removal of the Diablo Power Plant which serves much of California is predicted to have a heavy impact especially in SLO County.
It’s crazy how much home values differ from east coast to west. We are on the Atlantic side of the US and have the same issues but our home prices are much less. Funny to see everyone has problems
Great resource. Thank you.
Statistics can be interpreted in many ways but it’s important to at least start with hard data and not just opinion.
Just another bubble, worse than the others – and I’ve witnessed quite a few.
When THIS one goes, it will be ugly.
~ Occams
Based on what? The real estate market is much stronger and more stable compared to 2006-2007.
Based on what you just said. I’m sure you asked and said the same thing back in 2006-2007, that you think the real estate market was much stronger and more stable compared to the previous recession.
The real estate market will be surprised when rates rise causing a drop in prices. Rates can’t stay this low forever. Even with a recession due t Biden’s more regulatory policies will bring back a Jimmy Carte economy.