— Seventeen percent of California households could afford to purchase the $887,380 median-priced home in the third quarter of 2025, up from 15 percent in second-quarter 2025 and up from 16 percent in third-quarter 2024.
— A minimum annual income of $223,600 was needed to make monthly payments of $5,590, including principal, interest, taxes and insurance on a 30-year fixed-rate mortgage at a 6.67 percent interest rate.
— Twenty-seven percent of home buyers were able to purchase the $649,990 median-priced condo or townhome. A minimum annual income of $163,600 was required to make a monthly payment of $4,090.
Cooling market competition and an increase in available housing helped moderate home prices and allowed more Californians to buy homes in the third quarter of 2025, theCALIFORNIA ASSOCIATION OF REALTORS®(C.A.R.) said today.
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Infographic: https://www.car.org/Global/Infographics/HAI-2025-Q3
Seventeen percent of the state's homebuyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2025, up from 15 percent in the second quarter of 2025 and up from 16 percent in the third quarter of 2024, according to C.A.R.'s Traditional Housing Affordability Index (HAI). Housing affordability in California stayed near its all-time low and continued to be a challenge for both buyers and sellers.
The third-quarter 2025 figure is less than a third of the affordability index peak of 56 percent in the third quarter of 2012. C.A.R.'s HAI measures the percentage of all households that can afford to purchase a median-priced single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.
The effective mortgage interest rate declined for the second consecutive quarter, nearly reversing the growth experienced over the last year. The average effective interest rate receded to 6.67 percent in third-quarter 2025 from the previous quarter (6.90 percent) and slightly above a year ago (6.63 percent). Mortgage rates had oscillated through the first half of the year amid tariff-induced uncertainty, but have reached the lowest level in a year, despite a mild bounce back after the Federal Reserve's October decision to cut its benchmark rate by 25 basis points to 3.75% from 4.00%. The Fed is prepared to cut rates further in response to a cooling labor market, but elevated tariff rates will likely put upward pressure on inflation, which could prevent the U.S. central bank from easing its monetary policy too quickly. As such, while borrowing costs may remain lower in the short term, interest rates could fluctuate in the months ahead, creating a complex backdrop for would-be buyers when contemplating their home purchase timing or financing strategies.
The statewide median home price moderated in the third quarter of 2025 as market competition eased and housing supply improved, leading to slower price growth. Although mortgage rates edged down during the quarter, borrowing costs remained near record highs. The monthly payment for a median-priced home, including taxes and insurance, fell 3.8 percent from the previous quarter but was still 1.3 percent higher than a year earlier, reflecting a slight year-over-year increase in the effective mortgage rate.
A minimum annual income of $223,600 was needed to qualify for the purchase of a $887,380 statewide median-priced, existing single-family home in the third quarter of 2025. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,590, assuming a 20 percent down payment and an effective composite interest rate of 6.67 percent.
The statewide median price of existing single-family homes in California fell 2.0 percent in the third quarter of 2025 compared to the previous quarter, reflecting a cooling in market competition. However, on a year-over-year basis, home prices rebounded – rising 0.8 percent after posting the first decline in eight quarters earlier this year – as easing mortgage rates encouraged more buyers to return to the market. With the market transitioning into the off-season, home prices are expected to moderate further as seasonal factors kick in. If lower mortgage rates materialize in the months ahead and economic uncertainties subside, housing affordability could see some slight improvement in the next couple of quarters.
More California households (27 percent) could afford a typical condo/townhome in third-quarter 2025, rising from 25 percent both in second-quarter 2025 and in third-quarter 2024. An annual income of $163,600 was required to make the monthly payment of $4,090 on the $649,990 median-priced condo/townhome in the third quarter of 2025.
Compared with California, more than one-third (36 percent) of the nation's households could afford to purchase a $426,800 median-priced home, which required a minimum annual income of $107,600 to make monthly payments of $2,690. Nationwide, affordability edged up from 35 percent in both the second quarter of 2025 and a year ago.
Key points from the Third-Quarter 2025 Housing Affordability report include:
— When compared to the previous quarter, housing affordability in third-quarter 2025 declined in 10 counties and was unchanged in five. Although prices remained near all-time highs, 38 counties showed quarter-to-quarter improvement in affordability as a result of slightly lower mortgage rates, higher income and softer home prices. When compared to a year ago, affordability improved in three out of five counties across the state, with affordability improving in 32 counties, while 21 either declined (11), or showed no improvement (10).
— Lassen (52 percent) remained the most affordable county in California, followed by a two-way tie between Amador and Tuolumne at 36 percent, where a little over one out of three households in those counties able to afford to purchase the median-priced home in their respective county. Of all California counties, Lassen continued to require the lowest minimum qualifying income ($64,800) to purchase a median-priced home in third-quarter 2025.
— Mono (7 percent), was the least affordable county in the state, followed by Monterey (9 percent) and a two-way tie at 12 percent between Los Angeles and Santa Barbara, with each of those counties requiring a minimum annual income of at least $240,400 to purchase a median-priced home. San Mateo (18 percent) continued to require the highest minimum qualifying income ($524,000) to buy a median-priced home and once again was the only county requiring a minimum qualifying income of more than $500,000. Santa Clara (19 percent) came in second and San Francisco (22 percent) came in third with a minimum required income of $482,400 and $409,600, respectively.
— Borrowing costs at near-all-time highs remain a hurdle for improvements in housing affordability in many parts of the state. In the third quarter of 2025, the housing affordability index of 20 counties tracked by C.A.R. either remained unchanged or declined from the like quarter a year ago. Lassen (29 percent) experienced the biggest year-to-year drop, falling six percentage points. Tuolumne (36 percent) came in second with a five-point decline, while Glenn (37 percent) and Tehama (35 percent) followed closely, with each dipping three points below the same quarter of last year. Despite improving from a year ago, housing affordability remained near its all-time low and continued to be a challenge for both buyers and sellers.
— See C.A.R.'s historical housing affordability data. See first-time buyer housing affordability data.
Leading the way…® in California real estate for 120 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with 190,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Sacramento.
CALIFORNIA ASSOCIATION OF REALTORS® Traditional Housing Affordability Index Third Quarter 2025
Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 6.67% (3Qtr. 2025), 6.90% (2Qtr. 2025) and 6.63% (3Qtr. 2024).
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SOURCE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.)
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