As we move into March, we’re seeing the Orange County market find a new rhythm.
While mortgage rates have improved and inventory is beginning to build, buyers are still taking a more measured approach—creating a market that’s more balanced than what we’ve seen in recent years. Pricing, presentation, and strategy are making all the difference right now.
In this month’s update, we break down what’s happening nationally and locally—and what it means for you here in Orange County.
However, despite the fact that rates have come down substantially, the median home sale price has remained remarkably stable, coming in at $396,800 in January. This represents just a 0.86% increase on a year-over-year basis, and a 2.05% decline from December. It seems like the market has found a bit of equilibrium, as lower rates are being offset by cautious buyers who aren't quite ready to jump back in just yet.
New listings are ticking up as we head into the spring
As we move out of the seasonally slow winter months, we're starting to see new listings pick up, which is a great sign for the market heading into the spring. In February, there were 362,180 new listings that hit the market, representing a 2.41% year-over-year increase and a 10.01% month-over-month increase. This uptick in new listings is encouraging, as it suggests that homeowners are starting to feel more comfortable putting their homes on the market. On the inventory side, there were 1,220,000 homes available for sale in January, which is up 3.39% on a year-over-year basis. While this is certainly a step in the right direction, it's worth noting that inventory levels are still well below the levels we need to see in order for the market to truly become balanced. That said, the combination of rising new listings and modestly higher inventory levels should give buyers a few more options to choose from as we head into the busier spring months.
Buyers are still taking their time on the sidelines
Despite the fact that mortgage rates have come down by nearly 11% on a year-over-year basis, buyers are still being cautious. In January, existing home sales came in at 3,910,000, representing a 4.40% decline on a year-over-year basis and an 8.43% decline from December. This tells us that while the affordability picture has improved quite a bit, many buyers are still waiting for rates to come down even further before they make their move. It's also worth considering that the seasonal slowdown plays a role here, as January is historically one of the slower months for home sales. As we move into the spring and summer, it'll be worth keeping a close eye on this metric to see if the lower rates and increasing inventory levels are enough to bring buyers off the sidelines.
A market that could go either way in the coming months
Right now, the national market is in an interesting position. Inventory levels are slightly higher than they were last year, but existing home sales have declined, which means that the supply of homes on the market is lasting a bit longer than it was at this time last year. With new listings beginning to pick up heading into the spring, and buyers still largely sitting on the sidelines, we could see inventory continue to build in the coming months. However, if mortgage rates continue to trend downward, that could be the catalyst that brings buyers back into the market in a big way. As always, real estate is a highly localized asset, which is why you should check out what's going on in your local market below in the Local Lowdown!
The Local Lowdown
Quick Take:
-
After several months of positive year-over-year growth, median sale prices dipped back into negative territory in January, declining by 1.40%.
-
Inventory continues to build, with 9.13% more active listings on the market in February when compared to last year.
-
Listings are spending slightly more time on the market, with the median listing sitting for 35 days in January.
Orange County kicks off 2026 with a dip in median sale prices
After closing out 2025 on a positive note, with four consecutive months of year-over-year appreciation, Orange County started the new year with a slight pullback. The median single-family home sold for $1,410,000 in January, representing a 1.40% year-over-year decline. While this is certainly a departure from the momentum we saw in the final quarter of 2025, it's worth noting that January of last year was a particularly strong month, with the median sale price jumping to $1,430,000. That made for a tough comp heading into this year. When you couple this with the fact that inventory continues to build in the area, it's not all that surprising to see a bit of a pullback. That said, it will be important to watch the next couple of months closely to see whether this was a one-off dip or the beginning of a broader trend.
Inventory continues to climb as we head into the spring
Inventory levels continue to rise in Orange County, as more and more sellers list their homes heading into the spring season. In the month of February, there were 3,166 active single-family home listings on the market, representing a 9.13% increase on a year-over-year basis. This also represents a 10.70% increase on a month-over-month basis, which is to be expected as we move past the seasonal lows of the winter months. For context, inventory bottomed out at 2,860 listings in January before ticking back up in February. While these levels are still well below the summer peaks we saw in 2025, where inventory topped out at 4,952 in July, the year-over-year increases signal that buyers will continue to have more options to choose from as we move deeper into the spring selling season.
Listings are sitting for just a bit longer than they were last year
As inventory continues to build, we are seeing listings spend slightly more time on the market. In January, the median single-family home listing sat on the market for 35 days, representing a modest 2.94% increase on a year-over-year basis. This also represents a 16.67% increase on a month-over-month basis, which makes sense given that January is typically one of the slower months of the year for real estate activity. To put this in perspective, listings were sitting for considerably longer during the fall months, with October and November both coming in at 34 days. December saw a brief reprieve at 30 days before January pushed back up to 35. Overall, while the year-over-year increase is relatively modest, buyers are clearly taking a bit more time to evaluate their options before pulling the trigger on offers.
Orange County swings back to a buyers' market to start the year
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.
After ending December as a seller's market with just 2.1 months of supply, Orange County has swung back to a buyers' market to kick off the new year. As of January, there are 3.4 months of supply on the market, representing a massive 61.90% increase on a month-over-month basis. This shift is quite significant, as it signals that the seasonal contraction in inventory that we saw at the end of 2025 was short-lived. With inventory continuing to build heading into the spring, it will be interesting to see whether the market remains in buyers' market territory or if increased demand throughout the warmer months is able to absorb the additional supply.
