California’s housing market remains stagnant, trapped by erratic national economic policies and persistent inflation, according to the California Association of Realtors (CAR). June saw a modest 4% bump in monthly home sales, but this failed to offset broader market challenges, with sales declining 0.3% compared to the previous year.
The median home price slipped to $899,560 — a 0.1% dip from last year — diverging from the typical seasonal increase of 0.8%. “Market uncertainty and elevated mortgage rates are clearly suppressing housing demand,” the CAR report noted, suggesting the market may have already peaked for the year.
Housing supply has softened, with single-family housing starts falling to an 11-month low. Overall housing starts increased 4.6% due to multifamily construction, but single-family starts dropped 4.6% from May and 10% year-over-year, with Western permits plummeting 6.1%.
Consumer prices jumped 0.3% in June — the largest monthly increase since January — driven by rising food and energy costs. The annual inflation rate reached 2.7%, with core inflation at 2.9%. Trade-sensitive items like apparel and furnishings saw notable price increases.
“The latest reports imply that the inflation threat is far from over,” CAR warned, highlighting potential additional tariff impacts. Consumer spending showed mixed signals, with U.S. retail sales rising 0.6% in June, though this increase was partially attributed to higher prices rather than increased volume.
Year-to-date home sales remain marginally ahead — up 0.2% — but pending sales have declined for seven consecutive months. With the Federal Reserve expected to maintain current interest rates, relief from borrowing costs appears unlikely to reinvigorate the summer housing market.
California may still see a modest, single-digit price gain for the year, assuming the current slowdown doesn’t deepen. However, in a market defined by policy unpredictability and inflationary pressures, even this modest projection remains uncertain.
