Market Update Los Angeles
The spring rally that began back in January has officially pushed median home sale prices to their highest level in a year. In June, the median home sold for $440,600, representing a 2.18% month-over-month increase and a 1.83% year-over-year gain. This marks the fifth consecutive month of month-over-month price increases, and the median sale price has now surpassed the $432,700 peak we saw in June of last year. However, the affordability picture isn't quite as rosy as it was earlier in the year. Mortgage rates ticked up slightly to 6.43% in June, and the combination of rising prices and rates that have bounced off their March lows has pushed the median monthly P&I payment up to $2,274. While that's still 1.60% lower than the $2,311 the median homeowner was paying a year ago, the gap is shrinking fast. Back in January, the median P&I payment was $1,949, so monthly payments have risen by more than $300 in just five months. If this trend continues, the affordability gains that lower rates provided earlier in the year could be fully erased by the end of the summer.
After climbing steadily from the December low of 1,230,000, inventory levels appear to have plateaued. In June, there were 1,560,000 homes available for sale, representing a slight 0.64% month-over-month decline from the 1,570,000 we saw in May, though still 1.30% higher than where we were at this time last year. On the new listings front, 463,480 new listings hit the market in June, representing a 2.45% year-over-year increase but a 2.42% month-over-month decline from May. This pullback in both inventory and new listings could signal that the spring surge of supply is beginning to taper off, which would be notable given that June and July are typically peak months for inventory. If inventory begins to decline further while demand remains strong, we could see the market tighten up heading into the back half of the summer. On the other hand, inventory levels are still roughly in line with where they were last year, so there's no reason to panic just yet.
Existing home sales came in at 4,090,000 in June, representing a 4.07% year-over-year increase, the strongest year-over-year gain we've seen in quite some time. That said, sales did pull back by 2.39% from May's pace, which isn't unusual given the typical seasonality of the market. The year-over-year increase is the real headline here, as it tells us that buyers are meaningfully more active than they were at this point last year. This is likely being driven by a combination of factors: mortgage rates are still lower than they were a year ago, inventory is providing more options to choose from, and the steady march of price appreciation may be creating a sense of urgency among buyers who don't want to wait any longer. The question heading into the second half of the year is whether this momentum can be sustained. With mortgage rates hovering in the mid-6% range and monthly payments creeping higher, we could see some buyers pull back if affordability continues to erode.
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.
Right now, the national market appears to be tilting in favor of sellers. Existing home sales are up more than 4% year-over-year, which means demand is absorbing the available supply at a healthy clip. At the same time, inventory has plateaued and even declined slightly on a month-over-month basis, which means the supply side of the equation isn't growing fast enough to offset the increase in demand. If this dynamic persists through the summer, we could see months of supply tighten further, giving sellers even more leverage. However, with monthly P&I payments rapidly approaching where they were a year ago, there's a chance that demand cools off in the coming months, which would bring the market back toward balance. 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!
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This is the headline that many in the Southern California market have been waiting for. After months of mixed results, all four major markets are now posting positive or essentially flat year-over-year median sale price growth. Orange County continues to lead the charge, with the median single-family home selling for $1,492,500 in May, a 5.14% year-over-year increase and the highest median sale price we've seen since June 2025. This marks the third consecutive month of accelerating appreciation for Orange County. San Diego remains solid as well, with the median sale price coming in at $1,059,000, a 0.86% year-over-year increase that extends the area's streak to eight consecutive months of gains. Los Angeles delivered perhaps the most significant news of the month, as the market finally snapped its five-month streak of year-over-year declines. May's median of $838,350 represents a modest 0.34% year-over-year gain, but the reversal shouldn't be understated. Riverside also returned to positive territory with a 0.31% year-over-year gain, bringing its median to $640,000.
Throughout much of 2025, Southern California was dealing with a significant inventory overhang compared to the prior year. That chapter has definitively closed. San Diego continues to lead the way with inventory now running 6.16% below last year's levels, with 5,739 active single-family home listings on the market. This marks the second consecutive month of widening year-over-year inventory declines. Orange County isn't far behind, with a 3.71% year-over-year decrease bringing active listings to 4,544. Los Angeles delivered a striking development as well, with inventory now essentially flat on a year-over-year basis at just a 0.02% decline. This is a dramatic shift from earlier in the year, when inventory was running 10% or more above prior year levels. Riverside has also normalized, with inventory essentially flat at just a 0.17% year-over-year increase. The combination of steady buyer demand and a more measured flow of new listings has brought inventory levels back in line across the entire region.
If there's one metric that tells the story of how competitive the market has become, it's days on market. San Diego is seeing the most dramatic acceleration, with the median home selling in just 14 days, a 22.22% decrease on a year-over-year basis. To put this in perspective, at the market's slowest point in January 2026, listings were spending 29 days on the market. Orange County and Los Angeles have both settled into a comfortable rhythm, with listings spending 23 and 24 days on the market, respectively. Both are essentially flat compared to last year. Riverside remains the slowest of the four markets at 37 days, though even that figure represents an improvement from earlier in the year. The overall trend is clear: buyers are engaged and making decisions relatively quickly across the region, which bodes well for sellers as we move deeper into the summer.
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.
The four major Southern California markets have converged toward balanced territory as we head into the summer selling season. San Diego and Orange County both ended May with exactly 3.0 months of supply, placing them right at the threshold of balanced market territory. Los Angeles sits just slightly above at 3.7 months, while Riverside has 3.9 months. Perhaps more importantly, all four markets are running below where they were at this time last year in terms of months of supply. San Diego is down 11.76% year-over-year, Orange County is down 9.09%, Los Angeles is down 5.13%, and Riverside is down 11.90%. This across-the-board improvement in market conditions, combined with normalized inventory levels and prices trending upward, suggests that the region is in a healthy position heading into the peak summer months.
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