California Home Prices Hold Near $900,000, but Mortgage Rates Above 7% Cloud the Fall Market

California’s housing market ended the peak buying season on a firm note, but the ground is shifting beneath it. The California Association of Realtors reported on Sept. 16 that the statewide median price rebounded to $901,420 in August, up 1.6% from July’s $887,210 and 0.1% from a year earlier, the fourth straight annual gain. Annualized sales rose 2.4% from July to 269,620, up 1.4% from last August. Even so, sales have stayed below the 300,000-unit benchmark for 47 consecutive months. PR Newswire

The bigger story is borrowing costs. Thirty-year fixed rates averaged 6.67% in August, up from 6.59% a year earlier, but C.A.R. noted they have climbed sharply since late August, topping 7.0% in the second week of September by one industry tracker, Mortgage News Daily, and approaching a 20-month high. C.A.R. chief economist Jordan Levine said pending sales softened and inventory is taking longer to clear, and that a more restrictive Federal Reserve path could keep rates elevated or push them higher, weighing on activity this fall. PR Newswire

Beneath the headline price, appreciation is modest. The median price per square foot fell 1.4% from July to $428 and is up just 0.2% from a year ago. The share of million-dollar sales declined for a third straight month, to 35.2%, which suggests August’s gain was not driven by luxury deals. Homes sold at 98.9% of list price on average, and the median time to sell was 28 days, down from 31 a year ago. The unsold inventory index climbed to 3.7 months, a six-month high, though it remains below last year’s 3.9 months, and active listings were down 6.2% year over year.

Regional results diverged. Compared with last August, sales fell 4.8% in Southern California, 4.2% in the Bay Area and 3.2% on the Central Coast, while the Central Valley rose 1.5% and the Far North gained 15%. Prices were up 2.9% in Southern California, down 0.2% in the Bay Area and down 2.3% on the Central Coast. Statewide, 32 of 53 tracked counties posted higher median prices than a year earlier, while 28 counties saw more sales. Condos and townhomes lagged, with a $640,000 median price, down 1.5% from a year ago, and sales down 4.7%.

Affordability is the core constraint. Fewer than one in five California households could afford the median-priced home in the second quarter, according to C.A.R., and the affordability rate fell to the low-to-mid teens in markets including the Central Coast and Orange County. Mortgage rates that are nearly triple their level of five years ago stand to push more would-be buyers out of the market, at least temporarily. CalHomeNews

What to watch: C.A.R. noted that prices typically ease in fall and winter, so the September report due next month will show whether the jump in mortgage rates is cooling demand. Sales in the Inland Empire, which fell 8.4% from last year, and prices in the Bay Area, where the median slipped to $1.27 million, are the areas to track. PR Newswire

Sources: C.A.R. via PR Newswire (prnewswire.com, Sept. 16, 2026); CalHomeNews (calhomenews.com/2026/09/19/a-bright-spot-in-a-four-year-sales-slump-in-august-but-with-storm-clouds-on-the-horizon/)