CA housing market remains sluggish.
California’s housing market retreated in March as the Iran conflict, surging energy prices and financial market volatility kept potential homebuyers and sellers in hibernation mode, according to C.A.R.’s latest home sales and price report. Existing, single-family home sales totaled 265,320 in March on a seasonally adjusted basis, down 3.5percent from February and down 2.5 percent from 272,020 in March 2025. The statewide median home price soared 7.1 percent to $889,190 in March and inched up 0.4 percent from $885,900 in March 2025. Year-to-date statewide home sales fell 1.3 percent.
Middle-class homeownership act qualifies for ballot.
The Middle-Class Homeownership Act has officially qualified for the state’s November ballot as part of the campaign to build new housing and make home loans affordable for middle-class Californians.
This measure enables middle-income Californians to purchase a new home with only 3% down, while spurring a wave of new home construction – at no cost to taxpayers. Here are some additional key aspects of the measure, if approved. It would:
- Authorize $25 billion in revenue bonds to provide low-interest, downpayment-assistance loans to eligible Californians.
- Protect taxpayers by requiring bonds to be repaid by investors and home loan borrowers.
- Help address California’s housing affordability crisis by incentivizing new single-family home construction and increasing the supply of new homes.
- Fuel construction of approximately 190,000 new homes, generating significant economic benefits across the state.
To qualify, homebuyers must be California residents, meet minimum income requirements, pay at least 3% down, make monthly payments and occupy the home as their residence. Consumer protections include fixed low-interest rates on home loans, with strict limits on bank fees and no penalty for early payoff of home loans.
The Iran War impact on the US housing market
Few people buying homes in late February were thinking about the Strait of Hormuz. Many of them are now. In the weeks since the Iran conflict started, the U.S. residential real estate market has been absorbing a compounding series of shocks, including spiking oil prices, elevated inflation, rate volatility, and a creeping credit crisis unfolding on household balance sheets. It is all traceable to the war and its disruption of global energy markets. The spring housing market, historically the busiest selling season of the year, has been a disappointment in many regions.
The mechanism by which a military conflict in the Middle East translates into a higher monthly mortgage payment is faster and more direct than most people realize. Put another way: The spring 2026 housing market had all the makings of a breakout season. Then Iran happened. Mortgage rates had just dropped below 6 percent for the first time in four years when the conflict broke out, sending them as high as 6.45 percent and rattling buyer confidence. Existing-home sales slid to a nine-month low, according to the National Association of Realtors.
Bond investors, anticipating inflation, sold long-duration Treasuries, pushing the 10-year yield from just under 4 percent in late February to approximately 4.4 percent. It was a peak reached in late March as the conflict showed no signs of resolution. Mortgage rates followed in lockstep, rising from 5.98 percent on Feb. 27 to 6.30 percent as reported by Freddie Mac for the week ending April 30, and to approximately 6.45 percent on April 29 after the President signaled that the naval blockade of Iran would continue for the foreseeable future.
On a $360,000 loan, that nearly half-point increase translates to an extra $109 per month, $1,308 per year and roughly $39,000 more in total interest over the life of the loan. Credit scores as collateral damage. While the rate increase appears on every loan estimate, a former mortgage bank director argues that a second, less visible crisis is unfolding that will outlast the conflict itself. Since late February, there has been a consistent pattern across mortgage applicants’ credit reports: balances rising, utilization ratios climbing, and FICO scores dropping. Not by 5 or 10 points, but by 30 to 60 points on average.
Gas averaging above $4.30 per gallon nationally by the end of April, groceries and utilities caught up in broader inflation running close to 3 percent, and rising financing costs across the board are forcing households to absorb excess expenses by charging them to credit cards, which carry an average annual rate of around 21 to 22 percent.
As utilization climbs – particularly above 30 percent – it begins to weigh more heavily on the FICO score used to determine mortgage eligibility, with higher balances signaling greater risk to lenders regardless of the ratio’s level. The numbers make the stakes concrete. A borrower with a 760 FICO score qualifies for today’s prevailing rate of 6.30 percent. The same borrower, after a 60-point drop to 700, may face a rate of 6.63 percent to 7 percent. And, for those putting less than 20 percent down, a higher PMI premium on top of that.
This also creates a debt-to-income problem eroding mortgage eligibility driven by growing credit card balances, higher minimum payments, elevated auto loan obligations, and BNPL installment payments that underwriters are increasingly pulling from bank statements.
A household that moved from 28 percent non-mortgage DTI in January to 33 percent by April has not necessarily taken on any new debt. Instead, rising gas, groceries, and utility costs are pushing more spending onto credit cards, and minimum payments rise with balances. The result is that many families have lost roughly $40,000 to $65,000 of mortgage approval capacity without realizing it, depending on household income.
Comparisons of the 1973 oil embargo have circulated widely since the conflict began. Back then, oil prices rose by 75 percent in two months, transaction volume fell – existing home sales dropped 4.3 percent for the full year – price appreciation stalled, and the market slugged along until oil prices retreated and the recession lifted in 1991. Total bankruptcy filings rose from 331,000 in 1980 to 380,000 in 1982 – about a 15 percent increase – before continuing to climb sharply through the mid-1980s.
The markets that have shifted the most in homebuyers’ favor.
A new Bankrate analysis lays out just how fractured the U.S. housing market has become, and where unexpected openings for buyers now lie. Markets that were red-hot during the pandemic have cooled significantly, while others remain as competitive as ever. The result: There is no single national housing story right now, just hundreds of local ones.
The former hot Sun Belt markets have cooled, while the Northeast and Midwest have stayed hot. The big driver here is construction activity. The softest markets now [have] experienced big booms that spurred new building, and that has led to a large supply of new and existing homes on the market in those places. The clearest pattern in the data is that the metros that swung hardest toward buyers are concentrated in the Sun Belt and Mountain West, the same markets that saw some of the most aggressive price appreciation during the pandemic.
Colorado Springs, Colorado; Raleigh, North Carolina; and Austin, Texas, lead the list, all posting shifts above +60. Denver, Dallas, Salt Lake City, and several Florida metros follow close behind. In these markets, the pandemic-era frenzy has cooled, leaving buyers with more inventory, more negotiating room, and less competition than they have had in years.
The opposite is true across much of the Midwest and Northeast, where conditions have shifted toward sellers. New York City (-77), Poughkeepsie, New York (-75), and Albany, New York (-74) sit at the far end of the scale, followed by Milwaukee (-68), Chicago (-65), and several Ohio and Pennsylvania metros. These markets largely missed the pandemic boom, and without an overheated run-up to correct, they never snapped back. Constrained inventory and steady demand have quietly handed sellers the advantage, in many cases.
For homebuyers, the takeaway is that market conditions vary enormously depending on where you are shopping. A buyer in Austin or Raleigh is working in a fundamentally different environment than one in Philadelphia or Cleveland, with more listings to choose from, more room to negotiate on price, and less pressure to waive contingencies.
In still competitive markets, buyers should not expect much relief. In Sun Belt markets, the calculus has flipped. Inventory is up, sellers are cutting prices and dangling concessions, and buyers can afford to be methodical, touring broadly, studying comps, and negotiating without panic. For Sun Belt sellers, the mindset shift is non-negotiable. The bidding-war era in these markets is over, at least for now.
Some areas you might want to know about…
Scotts Valley is a small city in Santa Cruz County on the upland slope of the Santa Cruz Mountains. From the 1840s, money-making activity in Scotts Valley centered on lumber, grain, and most importantly the tanning of hides and working of leather. Scotts Valley’s most famous resident was film director Alfred Hitchcock, who lived on a mountaintop estate above the Vine Hill area from 1940 to 1972. Scotts Valley is also near Big Basin Redwoods State Park, Henry Cowell Redwoods State Park, and Roaring Camp Railroads.
Pacific Grove is a city situated on the southern edge of Monterey Bay, on the Central Coast of California and located in Monterey County. Following the Mexican American War and the U.S. conquest of California, the area developed into a notable fishing village. By 1875, the Pacific Improvement Company owned most of the area and founded the modern settlement as a Methodist retreat. The Pacific Grove Monarch Butterfly Sanctuary, Pacific Grove Marine Gardens State Marine Conservation Area, Lovers Point State Marine Reserve, Edward F. Ricketts State Marine Conservation AArea, and Asilomar State Marine Reserve are marine protected areas in the waters around Pacific Grove.
And finally, Los Gatos is Spanish for “The Cats” where the cats refer to the cougars and bobcats that are indigenous to the foothills in which the town is located. In the early 20th century, the town became a thriving agricultural town with apricots, grapes and prunes growing in the area. By the 1920s, Los Gatos area had a local reputation as an arts colony, attracting painters, musicians, writers, actors, and their bohemian associates as residents over the years. Los Gatos is surrounded by several mountain bike trails. Cyclists can leave from downtown on a 20-mile (32 km) loop through the Santa Cruz Mountains. is the Watsonville wetlands, a system of freshwater sloughs with open water and native vegetation that extend from the city to the ocean.