Median home sale prices have declined for the third straight month, slipping to $417,500 in September, though they remain slightly above where they were a year ago.
Inventory broke out of its four-month plateau in September, climbing to 1,600,000 homes, the highest level in over a year.
Existing home sales ticked up modestly from August but remained below last year's pace, while mortgage rates have surged into the low 7% range.
*National Association of REALTORS® data is released two months behind, so we estimate the most recent month's data when possible and appropriate.
The spring rally has given way to a fall cooldown
After a five-month run that carried the median sale price from $395,000 in January to a peak of $442,800 in June, prices have now retreated for three consecutive months. In September, the median home sold for $417,500, a 2.39% decline from August's $427,700 and a 5.71% drop from the June high. The one silver lining is that prices are still holding above last year's level, up 1.26% from the $412,300 median we saw in September 2025. Some of this seasonal softening is normal, as the back half of the year typically brings cooler pricing, but the affordability story is doing real damage here. Mortgage rates climbed to 6.71% in September and then jumped sharply to 7.28% in October, a full 128 basis points above the 6.00% low we saw back in March. Even with prices falling, the median monthly P&I payment sits at $2,236, which is 6.68% higher than the $2,096 buyers were paying a year ago and nearly $300 above January's $1,949. In other words, lower prices have not translated into lower payments, and with rates now pushing above 7%, the affordability squeeze is likely to intensify before it eases. Worth watching on that front: the Federal Reserve has continued to let its mortgage-backed securities holdings run off, with the balance falling from roughly $2.04 trillion in January to about $1.90 trillion in October, which removes a meaningful source of demand from the mortgage market.
Inventory breaks out of its summer plateau
For four straight months, from May through August, inventory sat frozen at 1,570,000 homes. That changed in September, when inventory climbed to 1,600,000, a 1.91% month-over-month increase and a 4.58% gain over the 1,530,000 homes available at this time last year. This is the highest inventory level we have seen in well over a year, and notably it is rising at a point in the calendar when supply usually begins to contract. The new listings data tells a slightly different story, though. September brought 394,830 new listings to market, down 1.72% from August and down 0.65% from the 397,428 we saw in September 2025. So the inventory build is not coming from a flood of new sellers. Instead, it reflects homes sitting on the market longer and failing to clear at current prices. That is a meaningful distinction, because it suggests the supply increase is a demand problem rather than a supply surge, and it helps explain why prices have been drifting lower since June.
Sales edge higher, but remain below last year's pace
Existing home sales came in at 3,990,000 in September, a 1.53% increase from August's 3,930,000, which was the weakest reading in this entire data series. That modest uptick is welcome, but the year-over-year comparison is less encouraging: sales are down 2.21% from the 4,080,000 pace recorded in September 2025. The trend over the past several months has been clearly downward, with sales falling from 4,190,000 in May to 4,130,000 in June, 4,060,000 in July, and then 3,930,000 in August before September's small rebound. The timing lines up almost perfectly with the climb in mortgage rates, which bottomed at 6.00% in March and have risen in nearly every month since. Buyers who were energized by cheaper financing in the spring are now facing a very different math problem. With October rates at 7.28%, it is difficult to build a case for a meaningful rebound in transaction volume in the near term, though lower prices combined with the widest selection of homes in more than a year could tempt patient buyers who have been waiting on the sidelines.
The leverage has shifted toward buyers
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.
Nationally, the math now points squarely toward a buyers' market. With 1,600,000 homes available in September against an annualized sales pace of 3,990,000, the national market is carrying roughly 4.8 months of supply, comfortably above the three-month balance point and up from about 4.5 months at this time last year. Inventory is growing, sales are running below last year's pace, and prices have fallen three months in a row, which is exactly the combination you would expect in a market where buyers hold the leverage. The caveat, of course, is that having leverage and being able to use it are two different things. With rates at 7.28% in October and the median P&I payment nearly 7% higher than a year ago, many buyers simply cannot act on the discounts now available to them. Sellers, for their part, should expect longer marketing times and should price realistically rather than anchoring to June's peak. 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
The median single-family home sold for $1,452,500 in August, up 4.87% from a year ago, marking the sixth consecutive month of year-over-year price growth even as prices ease back from their spring peak.
Inventory ticked back above last year's levels in September, with 4,735 active listings representing a 3.86% year-over-year increase after three straight months of running below 2025.
Listings are still moving meaningfully faster than last year, with the median home spending 27 days on the market in August compared to 32.5 days a year ago.
Prices cool off from their spring peak, but the year-over-year story is still strong
Orange County's median single-family home price came in at $1,452,500 in August, a 1.53% dip from July's $1,475,000 and the third consecutive month of modest declines since May's $1,492,500 high. Before anyone reads too much into that, it's worth noting that this kind of late-summer softening is a normal seasonal pattern, and the year-over-year picture remains firmly positive. August's median sits 4.87% above the $1,385,000 recorded in August 2025, continuing a streak of year-over-year appreciation that now stretches back to March. That growth has been remarkably durable, running at 5.36% in July and 1.36% in June, and it reflects a market where values have been reset at a higher level than they were a year ago. Put differently, the market gave back a little ground over the summer, but it is giving it back from a much higher starting point.
Inventory nudges back above last year as the fall selling season approaches
September brought a subtle but notable shift in the supply picture. There were 4,735 active single-family home listings on the market, a 3.86% increase over the 4,559 listings available in September 2025. That flips the script from the prior three months, when inventory had been running consistently below year-ago levels, including a 0.85% year-over-year decline in August and a 2.59% decline in July. On a month-over-month basis, inventory actually fell 2.85% from August's 4,874 listings, which is the first monthly decline since the January trough and a typical signal that the market is beginning to wind down from its summer peak. The combination of a seasonal pullback in absolute terms alongside a modest year-over-year increase suggests supply is normalizing rather than tightening or flooding. Buyers heading into the fall should still find a reasonable selection, while sellers aren't facing the kind of crowded field that would force aggressive price concessions.
Homes are selling noticeably faster than they were last year
The pace of sales continues to be one of the more encouraging data points in Orange County. The median single-family home listing spent 27 days on the market in August, which is 16.92% faster than the 32.5 days it took a year ago. That marks a meaningful improvement, and it's part of a broader pattern we've seen all year, with days on market running below 2025 levels in every month since the spring. On a month-over-month basis, August's 27 days represents a slight 3.85% uptick from July's 26 days, extending the gradual seasonal drift upward from the 21-day low we saw in March. Even so, the current figure is dramatically better than the 35 days recorded back in January, and the steady climb through summer has been far more gentle than the sharp deterioration we saw over the same stretch last year, when days on market jumped from 23 in May to 32.5 by August. Buyers remain engaged, and well-priced listings are still finding offers in roughly a month.
Orange County holds steady in balanced territory
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.
As of August, Orange County is sitting at 3.1 months of supply, placing it essentially right at the center of balanced territory. That figure is unchanged from July's 3.1 months and down 3.13% from the 3.2 months recorded in August 2025, meaning conditions are marginally more favorable to sellers than they were at this point last year. MSI has hovered in a narrow band between 2.8 and 3.1 months since March, which speaks to a market that has found genuine equilibrium rather than one that is lurching between extremes. Neither side holds a decisive advantage here. Sellers benefit from prices that remain well above last year and homes that are moving faster than they did in 2025, while buyers have a reasonable selection of inventory and enough time on the clock to do their due diligence. Heading into the fall, we'd expect MSI to drift modestly higher as transaction volume slows seasonally, but the underlying balance looks likely to hold.
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