Orange County Market Update

August 2025 - Orange County Market Update

Times Real Estate CA August 19, 2025

The Big Story

Quick Take:
  • The median home in the US is surprisingly appreciating at a slower rate than inflation.
  • Mortgage rates remain stagnant, in the high 6-percent range that we’ve seen for a couple of years at this point.
  • Inventory is continuing to build, as existing home sales remain stagnant on a year-over-year basis.
  • Another FOMC meeting has come and gone, and the federal funds rate remains unchanged.

Median home sales price grew by just 1.97%

In the not-so-distant past, housing price growth outstripped inflation growth by a wide margin. However, now that the housing market has normalized, we’re seeing more modest levels of appreciation, with the median home sale price increasing by just 1.97% on a year-over-year basis in June. This represents great news for home buyers, and the housing market as a whole, considering that the June CPI reading came in at 2.7%. It’ll be worth paying attention to this over the course of the next few months, especially considering that many analysts are expecting a rate cut from the Fed in the September FOMC meeting.
 

Inventory levels continue to build as more new homes hit the market

The trend of growing inventories has continued this month, with 15.91% more inventory on the market in June on a year-over-year basis. This growth in inventories can be attributed to the fact that the new homes are hitting the market at a much faster rate than new buyers are entering the market. In June, we saw a 0.77% increase in the number of existing homes sold on a year-over-year basis, while at the same time, we saw a 7.25% increase in the number of new listings hitting the market. Although there are still some buyers entering into the market every month, there is still a rather large contingent of people holding out until rates come back down.
 

The Fed is holding rates steady due to economic uncertainty

This past month, we saw the Fed hold rates steady once again, as they brace for the consequences of the newly minted tariff policies that went into effect in early August. Although inflation data has led many to believe that we need to see substantial rate cuts in the not-so-distant future, Fed officials are incredibly concerned about the potential impacts of the freshly enacted tariff policy. Additionally, the Fed has a dual mandate; it’s responsible for controlling inflation and promoting maximum employment. At this point in time, we’re seeing relatively low inflation, and a very low unemployment rate, so Fed officials seemingly aren’t in a hurry to cut the federal funds rate.
 

Mortgage rates remain stagnant, but comparatively high

It probably isn’t much of a surprise that inventories are building and median sale prices have remained relatively stagnant, given the lack of movement in rates. Many believe that there is a very large contingent of people who simply aren’t willing to pay a comparatively very high interest rate to purchase a home, especially given that many have locked into rates in the 2-4% range on existing homes. The consistently high mortgage rates that we’ve seen have led people to stay in their homes for longer, resulting in more sellers on the market than buyers. However, we might see some movement if we see some positive commentary from the Fed in the upcoming FOMC meeting.
 
However, it’s important to remember that this is what we’re seeing at a national level. Oftentimes, what we see in California can be quite a bit different than the nation as a whole. We’ve done a deep dive into California markets in the local lowdown section below.
 

The Local Lowdown

Quick Take:
  • Median sale prices show a return to positive growth with a modest 1.38% year-over-year increase in June 2025, breaking the two-month streak of declining prices.
  • Inventory levels continue their relentless climb with single-family home inventory showing a 52.42% year-over-year increase in July, reaching new record highs.
  • The median listing is now spending 26 days on the market, representing a substantial 44.44% increase compared to the same time last year.

Orange County Shows Signs of Price Stabilization

After two consecutive months of year-over-year price declines, Orange County's housing market is showing signs of stabilization. June 2025 saw the median single-family home selling for $1,470,000, representing a modest 1.38% increase compared to June 2024's $1,450,000. This marks a notable turnaround from the negative growth experienced in April (-1.57%) and May (-0.21%). The median price also demonstrated solid month-over-month growth of 3.56% from May's $1,419,500, suggesting that while the market faced headwinds earlier in the spring, there may be renewed buyer confidence emerging as we move into the traditionally active summer selling season
 

Inventory Reaches Unprecedented Heights as Supply Continues Its Surge

The Orange County housing market continues to be defined by an extraordinary abundance of available inventory. The latest data for July 2025 shows 4,952 single-family homes on the market, representing a substantial 52.42% increase compared to July 2024. While this growth rate has moderated somewhat from the 79% year-over-year increases seen in previous months, it still represents a continued month-over-month expansion of 4.94% from June's 4,719 homes. This sustained inventory growth throughout the spring and into summer demonstrates that the market remains heavily tilted toward providing buyers with an unprecedented selection of properties, fundamentally altering the negotiation dynamics that have favored sellers in previous years.
 

Market Pace Slows Significantly as Buyers Exercise Their Options

With the massive inventory available, buyers are clearly taking full advantage of their improved market position by extending their decision-making timelines. The median single-family home in Orange County now sits on the market for 26 days before selling, representing a dramatic 44.44% increase from June 2024's 18 days. This also reflects a significant 13.04% month-over-month increase from May's 23-day average, indicating that the trend toward longer selling times continues to accelerate. This extended timeline represents one of the most significant shifts in market dynamics, giving buyers the ability to thoroughly evaluate multiple properties, conduct detailed due diligence, and negotiate from a position of strength that simply wasn't available during the rapid-fire market conditions of recent years.
 

Orange County Firmly Establishes Itself as a Buyers' Market

When determining whether a market is a buyers' market or a sellers' market, we look to the Months of Supply Inventory (MSI) metric. The state of California has historically averaged around three months of MSI, so any area with at or around three months of MSI is considered a balanced market. Any market that has lower than three months of MSI is considered a sellers' market, whereas markets with more than three months of MSI are considered buyers' markets.
 
With 3.4 months of supply inventory in June 2025, Orange County has firmly established itself as a buyers' market. This represents a modest 3.03% month-over-month increase from May's 3.3 months and a significant 36% year-over-year increase from June 2024's 2.5 months of supply. The market has now consistently maintained above-balanced inventory levels for several consecutive months, giving buyers substantial leverage in negotiations. This shift represents a complete reversal from the seller-dominated conditions that characterized much of 2024, and sellers must now adjust their expectations accordingly in terms of both pricing strategy and realistic timelines for completing transactions.
 
Times Real Estate California

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