Market Update Los Angeles

The Big Story

Quick Take:
Median home sale prices surged past last year's levels in May, as the spring selling season continues to build momentum.
Inventory levels have climbed back to where they were at this time last year, giving buyers more options heading into the summer.
Existing home sales posted their strongest year-over-year gain in quite some time, signaling that buyers are finally coming off the sidelines.
Note: You can find the charts & graphs for the Big Story at the end of the following section.
*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 is in full swing

The spring selling season has delivered exactly the kind of price action that sellers were hoping for. The median home sold for $429,300 in May, representing a 2.83% month-over-month increase and a 1.32% year-over-year gain. This marks the fourth consecutive month of month-over-month price increases since the market bottomed out at $395,000 in January, and it's the highest median sale price we've seen since last summer. Helping fuel this rally is the fact that mortgage rates have come back down a bit after their April spike, settling at 6.37% in May, which is 5.77% lower than the 6.76% we were seeing at this time last year. That said, the median monthly P&I payment came in at $2,201, which is only 2.57% lower than the $2,259 the median homeowner was paying a year ago. The affordability gap is narrowing, as rising prices are beginning to eat into the savings that lower rates have provided. It'll be worth keeping a close eye on this dynamic as we move deeper into the summer months.

Inventory is back to last year's levels just in time for the summer rush

After spending much of the winter and early spring playing catch-up, inventory levels have finally returned to where they were at this time last year. In May, there were 1,550,000 homes available for sale, representing a 0.65% year-over-year increase and a 3.33% month-over-month gain. While the year-over-year increase is modest, it's encouraging to see inventory keeping pace with last year's levels, especially considering how tight supply has been for the past several years. On the new listings front, 474,976 new listings hit the market in May, representing a 2.12% year-over-year increase, though this was a slight 0.45% decline from April's pace. This tells us that sellers are still actively listing their homes, but the initial spring rush may be tapering off just a bit. If inventory continues to build through June and July, buyers heading into the summer could find themselves with the most options they've had in years.

Buyers are back, and they're buying

Perhaps the most encouraging data point this month is the significant uptick in existing home sales. In May, 4,170,000 homes changed hands, representing a 3.22% increase on both a month-over-month and year-over-year basis. This is a meaningful shift from the sluggish sales figures we've been tracking over the past several months, and it suggests that the combination of lower mortgage rates and growing inventory is finally pulling buyers off the sidelines. It's also worth noting that this is the highest existing home sales figure we've seen since December, when the market saw its seasonal year-end push. If this momentum carries through the summer, we could be looking at one of the more active selling seasons we've seen in recent years. Of course, the big wildcard here is mortgage rates. If rates continue to decline, it could add even more fuel to the fire. But if they tick back up, as they did in April, it could pump the brakes on what has been a very promising start to the summer.

The tug-of-war between buyers and sellers continues

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 finds itself in an interesting position. Inventory is growing, but existing home sales are growing right along with it, which means the months of supply on the market hasn't shifted dramatically in either direction. The fact that both supply and demand are ticking up simultaneously tells us that we're in a relatively balanced market at the national level. However, the direction of mortgage rates over the next couple of months will likely determine which way the scale tips. If rates continue their downward trajectory, demand could outpace supply, pushing us back toward a seller's market. On the other hand, if rates climb again, inventory could pile up, giving buyers the upper hand. 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!

Big Story Data

The Local Lowdown

Quick Take:
Median sale prices are surging in the coastal markets, with San Diego posting a 5.81% year-over-year gain and Orange County climbing by 3.71%, while Los Angeles continues to narrow its decline streak and Riverside remains slightly negative.
For the first time in well over a year, inventory levels have dipped below last year's levels in three of the four major markets, signaling that the excess supply built up throughout 2025 has been fully absorbed.
Listings are moving at a rapid pace across most of the region, with San Diego homes now selling faster than they were a year ago and Orange County matching last year's pace.
The coastal markets have firmly established themselves as seller's markets heading into summer, while Los Angeles hovers near balanced territory and Riverside remains a buyer's market.
Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

San Diego and Orange County Are Leading a Spring Surge in Prices

The spring selling season has brought a surge of appreciation to Southern California's coastal markets. San Diego is leading the charge, with the median single-family home selling for $1,074,000 in April, representing a 5.81% year-over-year increase and the strongest gain we've seen in quite some time. Orange County isn't far behind, with the median sale price climbing to $1,470,000, a 3.71% year-over-year increase and the highest figure we've seen since June 2025. Both markets have now posted back-to-back months of accelerating appreciation, suggesting that buyer demand is clearly heating up as we head into the busiest stretch of the year. Los Angeles continues to work through its stretch of year-over-year declines, but the gap keeps getting smaller. April's median of $845,410 represents just a 0.57% decline, down from the 2.35% drop we saw in December. If this trajectory holds, the decline streak could come to an end soon. Riverside rounded out the picture with a modest 0.78% year-over-year decline, bringing its median sale price to $640,000.

Inventory Has Flipped Below Last Year's Levels Across Most Markets

In a significant shift from the trends we've been tracking for the better part of the past year, inventory levels have now dipped below where they were at this time last year in three of the four major Southern California markets. San Diego led the way with a 3.13% year-over-year decrease, bringing active listings to 5,487. Orange County followed with a 2.60% decrease, landing at 4,341 active listings. Riverside has also crossed into negative territory with a 0.79% year-over-year decrease, bringing inventory to 7,646 homes. This is the first time we've seen year-over-year inventory levels dip into negative territory in well over a year for these markets, and it suggests that the excess supply built up throughout 2025 has been fully absorbed. Los Angeles is the only market still running above last year's levels, though even that gap has shrunk considerably to just 3.39%, with 14,159 active listings on the market.

Listings Are Flying Off the Market in the Coastal Markets

Buyer activity is clearly accelerating across Southern California, and it shows in how quickly listings are moving. San Diego saw the most dramatic improvement, with the median home selling in just 16 days, an 11.11% decrease on a year-over-year basis. This is a noteworthy reversal from the trends we saw throughout much of 2025, when listings were consistently spending more time on the market. Orange County continues to match last year's pace, with the median listing spending 22 days on the market, flat on a year-over-year basis. Los Angeles has also seen significant improvement from its winter slowdown, with listings now sitting for 24 days, just 4.35% longer than last year and a far cry from the 38 days we saw back in January. Riverside remains the outlier, with listings sitting for 41 days, up 11.11% on a year-over-year basis. The fact that homes in the coastal markets are now selling at or faster than last year's pace, combined with declining inventory, suggests that competition among buyers is starting to intensify.

Coastal Markets Remain Firmly in Seller's 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.

The spring surge in demand has firmly established the coastal markets as seller's markets heading into summer. San Diego leads the way with just 2.7 months of supply, representing a 6.90% year-over-year decrease. Orange County follows closely at 2.9 months, a 6.45% year-over-year decline. With inventory now running below last year's levels, listings selling quickly, and prices appreciating at a healthy clip, sellers in these markets are in an increasingly favorable position. Los Angeles has continued its gradual shift back toward equilibrium, landing at 3.4 months of supply, a 5.56% year-over-year decrease that puts it just slightly above balanced territory. Riverside remains the only market firmly in buyer's territory at 4.0 months of supply, though even that figure represents a 4.08% year-over-year improvement. With the peak summer months just around the corner, sellers in San Diego and Orange County are well positioned, while buyers in Riverside still have meaningful leverage in negotiations.