Tuesday, May 12, 2026
California housing affordability hits 4-year high as prices soften, mortgage rates fluctuate
More Californians could afford homes in early 2026 as prices dipped and incomes rose, according to a new Realtors report. But in San Diego County, affordability slipped from the previous quarter, with buyers needing nearly $255,000 in annual income to pur
California housing affordability improved in the first quarter, reaching its highest level in four years as lower mortgage rates, slowing home-price growth and rising incomes helped more buyers qualify for homes, according to a report released Thursday by the California Association of Realtors.
The group said 22% of California households could afford to buy the state's median-priced single-family home during the January-through-March period, up from 21% in the fourth quarter and 19% a year earlier.
Even with the improvement, affordability remained near historic lows, with buyers needing an annual income of at least $204,800 to purchase a median-priced California home at prevailing mortgage rates, CAR said.
The statewide median price for an existing single-family home fell 3% quarter-over-quarter to $843,390 in the first quarter. Compared with the same period last year, prices dipped 0.5%, marking the first annual statewide decline since mid-2023, according to the report.
Monthly housing payments also eased. The typical monthly payment, including principal, interest, taxes and insurance, declined 3.9% from the fourth quarter and 6.1% from a year earlier to $5,120.
CAR said affordability gains were driven largely by softer home prices and lower mortgage rates earlier in the year. However, rates became increasingly volatile after the outbreak of the Iran war in late February, which pushed oil prices higher and renewed inflation concerns.
According to the report, the average 30-year fixed mortgage rate climbed from below 6% before the conflict to more than 6.6% by late March as investors anticipated higher energy costs and a more cautious stance from the Federal Reserve.
The association warned that if mortgage rates continue rising and geopolitical tensions persist, affordability could weaken later this year despite slower home-price growth.
In San Diego County, affordability slipped from the previous quarter. Just 17% of households could afford the county's median-priced home in the first quarter, down from 19% in the fourth quarter but up from 15% a year earlier.
The median price of a single-family home in San Diego County reached $1.05 million in the first quarter, according to CAR, requiring a minimum qualifying income of $254,800 and generating a monthly payment of roughly $6,370.
Across Southern California, affordability varied widely in the first three months of the year. In Orange County, only 16% of households could afford a median-priced home of nearly $1.44 million, while affordability stood at 18% in Los Angeles County and 20% in Ventura County.
The more affordable Inland Empire region posted stronger numbers. Affordability reached 26% in the Inland Empire overall, including 35% in San Bernardino County and 29% in Riverside County.
Condominiums and townhomes remained more attainable than detached homes statewide. About 32% of California households could afford a median-priced condo or townhome in the first quarter, up from 31% in the prior quarter and 27% a year earlier. Buyers needed an annual income of $157,200 to afford the median-priced condo or townhome of $648,000.
Nationally, housing affordability remained substantially stronger than in California. The report found 44% of U.S. households could afford the median-priced American home, compared with 22% in California. The nationwide median home price was $404,300, less than half California's median price.
Among California counties, Lassen County remained the state's most affordable market, with 61% of households able to afford a median-priced home. Mono County ranked as the least affordable, with only 6% of households able to qualify for a median-priced home purchase.
San Mateo County posted the state's highest minimum qualifying income requirement at $534,400 annually, followed by Santa Clara County at $492,800 and San Francisco County at $479,600.
The group said 22% of California households could afford to buy the state's median-priced single-family home during the January-through-March period, up from 21% in the fourth quarter and 19% a year earlier.
Even with the improvement, affordability remained near historic lows, with buyers needing an annual income of at least $204,800 to purchase a median-priced California home at prevailing mortgage rates, CAR said.
The statewide median price for an existing single-family home fell 3% quarter-over-quarter to $843,390 in the first quarter. Compared with the same period last year, prices dipped 0.5%, marking the first annual statewide decline since mid-2023, according to the report.
Monthly housing payments also eased. The typical monthly payment, including principal, interest, taxes and insurance, declined 3.9% from the fourth quarter and 6.1% from a year earlier to $5,120.
CAR said affordability gains were driven largely by softer home prices and lower mortgage rates earlier in the year. However, rates became increasingly volatile after the outbreak of the Iran war in late February, which pushed oil prices higher and renewed inflation concerns.
According to the report, the average 30-year fixed mortgage rate climbed from below 6% before the conflict to more than 6.6% by late March as investors anticipated higher energy costs and a more cautious stance from the Federal Reserve.
The association warned that if mortgage rates continue rising and geopolitical tensions persist, affordability could weaken later this year despite slower home-price growth.
In San Diego County, affordability slipped from the previous quarter. Just 17% of households could afford the county's median-priced home in the first quarter, down from 19% in the fourth quarter but up from 15% a year earlier.
The median price of a single-family home in San Diego County reached $1.05 million in the first quarter, according to CAR, requiring a minimum qualifying income of $254,800 and generating a monthly payment of roughly $6,370.
Across Southern California, affordability varied widely in the first three months of the year. In Orange County, only 16% of households could afford a median-priced home of nearly $1.44 million, while affordability stood at 18% in Los Angeles County and 20% in Ventura County.
The more affordable Inland Empire region posted stronger numbers. Affordability reached 26% in the Inland Empire overall, including 35% in San Bernardino County and 29% in Riverside County.
Condominiums and townhomes remained more attainable than detached homes statewide. About 32% of California households could afford a median-priced condo or townhome in the first quarter, up from 31% in the prior quarter and 27% a year earlier. Buyers needed an annual income of $157,200 to afford the median-priced condo or townhome of $648,000.
Nationally, housing affordability remained substantially stronger than in California. The report found 44% of U.S. households could afford the median-priced American home, compared with 22% in California. The nationwide median home price was $404,300, less than half California's median price.
Among California counties, Lassen County remained the state's most affordable market, with 61% of households able to afford a median-priced home. Mono County ranked as the least affordable, with only 6% of households able to qualify for a median-priced home purchase.
San Mateo County posted the state's highest minimum qualifying income requirement at $534,400 annually, followed by Santa Clara County at $492,800 and San Francisco County at $479,600.
