California’s housing market reached a historic peak in April, but few are celebrating, as a new report from the California Association of Realtors (CAR) revealed that while the statewide median home price soared to an all-time high of $910,160, home sales continued to slump under the weight of economic uncertainty and elevated interest rates.
It was the 22nd consecutive month of year-over-year price increases, yet home sales declined for the second time in four months. Analysts point to high borrowing costs and wavering consumer confidence as major contributors, underscoring how national economic policy decisions are reverberating across the Golden State’s housing sector.
Although inflation dropped to a four-year low in April, at 2.3%, any optimism was dampened by sharply reduced retail sales growth and ongoing concerns over international trade negotiations. The slowdown in consumer spending—up just 0.1% in April after a 1.7% increase the previous month—signals a public wary of economic headwinds.
“Consumers remain cautious,” the CAR report noted, citing the uncertainty surrounding tariff negotiations and weakening sentiment around financial stability.
For Californians trying to buy a home, the administration’s mixed economic signals have created a tough landscape. Elevated mortgage rates—driven in part by national monetary policy—are making homeownership increasingly unattainable, especially as wages fail to keep pace with soaring home prices. While April’s 0.7% year-over-year price growth was modest by historical standards, it continued a trend that has made California one of the most expensive housing markets in the country.
Meanwhile, the construction sector shows little sign of filling the supply gap. Despite a slight rebound in housing starts nationally in April, the CAR report noted that new single-family construction in the West dropped a staggering 18.7% month-over-month. Permits for new homes—a key indicator of future development—also declined, suggesting that builders are pulling back amid rising costs and softening demand.
California has long struggled with a chronic housing shortage, said the report, and lower construction activity threatens to widen the gap between supply and demand. Builders are facing a trifecta of challenges: waning buyer interest, material inflation due to import tariffs, and a labor shortage—all of which are exacerbated by the broader economic climate.
“The pullback in both starts and permits paints a sobering picture,” the report stated.
With builder confidence sliding and buyers hesitant, economists warn that the spring and summer homebuying seasons may underperform. As long as federal economic policies continue to drive up costs and dampen confidence, California’s housing market could remain locked in a cycle of high prices and low activity.
