California’s housing market showed resilience in March, with year-over-year growth in home sales and a sharp rise in inventory. But industry experts warn that policy shifts and persistent economic uncertainty, particularly under the current administration, may slow progress in the coming months.
According to the California Association of Realtors, sales of existing single-family homes fell 2.3% from February to March, settling at a seasonally adjusted annual rate of 277,030 units. While still below the 300,000 benchmark for the 30th consecutive month, March’s numbers represented a 4.9% increase from the same time last year — signaling modest annual improvement.
The state’s housing supply reached a six-month high, driven by a surge in new active listings that marked the 14th consecutive month of year-over-year growth. March’s inventory increase came at the fastest pace since January 2023, as more sellers entered the market in response to rising prices and stabilized mortgage rates.
Still, the picture is far from settled. Fluctuating mortgage rates and fears of an economic downturn have begun to weigh on buyer sentiment. California Association of Realtors noted a fourth straight month of decline in pending home sales, a leading indicator for future closings. The slip in buyer activity could dampen the spring homebuying season, traditionally one of the busiest periods for the market.
“With consumer confidence still shaky and the outlook for personal finances uncertain, we may see continued softness in demand through the second quarter,” California Association of Realtors analysts reported.
On the national level, mixed signals further complicate the landscape. U.S. retail sales surged unexpectedly in March, outpacing economists’ projections with a 1.2% monthly gain. Consumers accelerated purchases of goods ranging from automobiles to building supplies, likely attempting to get ahead of price hikes spurred by a new wave of tariffs introduced by the administration, said the report.
However, this consumer spending bump contrasts sharply with slumping builder confidence. Nationwide, housing starts declined 11.4% month-over-month, with single-family home construction falling to an eight-month low — down 14.2% from February and 9.7% year-over-year. In the western U.S., starts dropped more than 30% as builders faced persistent labor shortages, elevated interest rates, and rising construction costs.
California Association of Realtors analysts say the administration’s tariff policies and broader economic strategies are fanning inflationary pressures and injecting uncertainty into consumer behavior, which could stunt both housing demand and supply in the quarters ahead.
In California, where affordability continues to be a major obstacle — with only 15% of households able to afford a median-priced home — even slight changes in interest rates or inflation expectations can ripple quickly through the market.
As more inventory hits the market and prices begin to moderate, the coming months will test whether California’s housing market can stay resilient against a backdrop of economic turbulence and policy unpredictability.
