^{Stay up to date with the latest in Southern California real estate, including market trends, luxury listings, neighborhood spotlights, and expert insights from our top-rated team—Times Real Estate CA, proudly serving Newport Beach, Huntington Beach, Newport Coast, and surrounding Orange County communities. Whether you're buying, selling, or simply staying informed, we’re here to guide you through every step of your real estate journey with local expertise and unmatched service. Let’s dive in!}

The Big Story

Quick Take:

Affordability remains a concern across the country despite lower interest rates compared to this time last year.
New homes are being added to the market, with the US seeing a 4.21% year-over-year increase in the number of new listings in February.
Inventory is getting back to healthier levels as we see backlogs begin to build across the country.

Affordability continues to be an issue nationwide

One of the headline issues in the real estate industry over the past few years has been, of course, the affordability (or rather the unaffordability) of homes. Unfortunately for new buyers, and more specifically first time home-buyers, this issue looks like it will persist throughout 2025. Mortgage rates remain comparatively high, and home prices largely have not given back their pandemic-era gains.

This has, of course, made the dreams of homeownership difficult to achieve for countless people around the country. With the median monthly principal and interest payment exceeding $2,100 per month on a nationwide level, people are struggling to afford the purchase of a new home!

New homes are starting to hit the market again

Fortunately for the market, there are plenty of new homes hitting the market though. While there are countless people sitting on the sidelines, waiting for lower interest rates to sell their current home and buy a new one, some of these holdouts are giving up and listing their homes. The writing seems to be on the wall, meaning more and more people are giving up on the thought that we will see lower interest rates in the short term, causing them to list their homes.

This has resulted in a pleasant jump in new home listings, despite us being at the tail end of the slow season. In the month of February, we saw more than 353,000 homes hit the market nationwide. This represents a 4.21% increase on a year-over-year basis, and an 8.15% increase on a month-over-month basis!

Inventories are beginning to build, offering more options for buyers

Since we are seeing new inventory hit the market and a steady level of demand, this is causing inventories to build, which is a great sign for those looking to enter the market! In the month of January, there were 1,180,000 homes listed on the market, representing a 16.83% increase on a year-over-year basis and a 3.51% increase on a month-over-month basis. At the same time, we’re seeing demand stagnate a bit, with 4,080,000 homes sold in January, representing a 2% increase when compared to last year and a 4.9% decrease when compared to last month!

Although a top-tier property will likely end up in a bidding war, no matter if it’s in Kansas City or Calabasas, this increase in inventory could mean that there are some deals to be had on listings that sit on the market for a few weeks.

While there are areas that deviate from the national trends, this is generally what's happening nationwide. Below, you'll find a local lowdown that provides you with the in-depth coverage of your area that you need. We will continue to monitor the housing market and overall economy to help guide you in buying or selling your home.

The Local Lowdown

Median sales price growth in Orange County remains strong, increasing by 8.33% on a year-over-year basis in January 2025.

Inventory in Orange County has seen a significant surge, with a 51.88% year-over-year increase as of February 2025.

As inventory grows, listings are taking longer to sell, with the average home spending 21.43% more time on the market compared to last year.

Orange County's home prices maintain steady growth momentum

Much like the rest of Southern California, Orange County has experienced considerable strength in its real estate market. While the first half of 2024 saw impressive year-over-year growth rates between 12-17%, this trend has moderated in recent months. From July 2024 to the present, appreciation has settled into the 4.7-8.3% range, which still represents healthy and sustainable growth. The most recent data shows median prices at $1,430,000 in January 2025, representing an 8.33% increase over January 2024. This slowdown in price appreciation likely reflects the substantial increase in inventory that has occurred in the market.

Inventory levels surge as more sellers enter the market

As interest rates have declined over the past several months, homeowners have become increasingly eager to move, resulting in many listing their existing properties. This has led to a significant increase in supply throughout the market. The most recent data indicates a 51.88% year-over-year increase in the number of active listings, with inventory reaching 2,901 homes in February 2025 compared to 1,910 in February 2024. This substantial rise in available homes has undoubtedly influenced price growth dynamics in the area.

Homes are spending more time on the market as buyers gain options

The flood of inventory into the market has provided buyers with more choices and reduced the urgency to make quick decisions. With more options available, buyers can spend more time comparing properties, considering their options, and negotiating with sellers. These factors are contributing to the increased time listings spend on the market. The most recent data shows a 21.43% year-over-year increase in average days on the market, with homes now taking approximately 34 days to sell in January 2025 compared to 28 days in January 2024.

Orange County shows signs of shifting toward a more balanced 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 seller's market, whereas markets with more than three months of MSI are considered buyers' markets.

Orange County's most recent MSI reading has increased to 3.2 months in January 2025, representing an 18.52% increase compared to January 2024. This suggests that Orange County has shifted from a seller's market to a slightly buyer-favored market for the first time in recent years. If this trend continues, buyers may gain additional negotiating power in the coming months, especially as we move into the traditionally active spring selling season.