Forget all the ballot initiatives aimed at helping wannabe homebuyers.
Ignore what the Federal Reserve may or may not be doing.
A more lasting fix for frustrated California house hunters would be falling home prices, as they clearly are balking at homebuying, with statewide sales running near the Great Recession’s lowest levels.
The only good news for those hoping to join California’s ownership class is that mid-year pricing at its weakest in nearly three years, my trusty spreadsheet says. Yet that came before the housing market was hit once again with 7% mortgage rates.
California home prices gained only 0.9% in the 12 months through June, according to a curious home price index from the Federal Housing Finance Agency that tracks the prices of more affordable homes, using purchase and refinancing application data., shows
How slow is that? It’s the third-worst performance among the states, and it trails the state’s historical average gain of 6.3% in data dating back to 1975.
It’s also the Golden State’s smallest price gain since the third quarter of 2023. Curiously, that summer saw the average 30-year mortgage rate top 7% for the first time since 2001.
Elsewhere
It’s no California quirk. Nationally, prices rose just 3% in the past year.
That’s a noteworthy weak gain, as it was the smallest one-year advance in this U.S. index since the first quarter of 2013. Yes, the worst in 13 years.
Note that since 1975, U.S. home prices have averaged 5% annual gains.
Also, at mid-year 2026, one-year home price gains in 10 states were at their lowest levels in at least 10 years.
What’s down?
These chilled gains are signs the market may finally be acknowledging the huge shortage of buyers who can afford today’s overpriced housing.
Additionally, elevated mortgage rates don’t create more house hunters. Nor do a wobbly job market and global instability.
Renting, for all its challenges, looks far more affordable.
And, to investors, a hot stock market makes homes look like a poor bet.
Shrinking profits
Let’s politely say that a lot has changed in the housing market since the Federal Reserve ended its cheap-money policies years ago.
For home prices, every state has seen smaller gains from 2022 through mid-year 2026 than in the previous four years
California home prices have averaged annual increases of 1.9% since 2022. That was the seventh-smallest increase among the states and trailed the nation’s 3.1% annual rate of gains.
Hey, Texas gains were the fourth-slowest at 1.5% per year, while Florida ranked sixth-slowest at 1.6%.
Even the nation’s fastest gains seem mild: New Jersey was up 5.6% annually since 2022, Connecticut 5.4% and New York 5.2%.
The boom years
Now, stack those small gains against the previous four years, when pandemic-era economic chaos and rock-bottom mortgage rates sent prices soaring.
California home prices surged at an annual 9.5% rate over the four years ending in the second quarter of 2022. That sizeable jump was the 11th-smallest gain among the states, as U.S. prices rose at an 11.3% annual rate.
The top gains were seen in Idaho, which averaged 16.5% annual increases. Florida was at 15.1% and Arizona at 14.6%. Texas was No. 19 at 11.5%
How hot was it? Even the slow spots for appreciation saw noteworthy gains: the District of Columbia averaged 4.6% per year, Louisiana 6.4% and North Dakota 6.7%.
Leader to laggard
California home gains have mellowed to a back-of-the-pack position among the states.
That’s bad for bragging rights. It’s better for affordability. And it’s a huge status change.
Think about the period between 1975, when the FHFA data starts, and 2018. That’s when today’s affordability problems were created, as California home values appreciated at an annual rate of 7.5%. That gain was No. 1 among the states and well above the nation’s 5.9% annual pace.
Yes, California was once America’s home appreciation king in an era when the state economy grew at top-of-the-charts speed.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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No. 1: Where is OC’s hottest homebuying neighborhood?
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No. 4: Enderle Center sold, Campo on 17th moves ahead in Tustin
No. 5: Rents rise in just 22% of SoCal. See which cities got hikes
No. 6: Home prices dip in 38% of OC. How did your ZIP do?
No. 7: LA-OC’s worst-paying jobs: Can those wages pay the rent?
No. 8: LA-OC homes still ‘unaffordable’ even with a 0% mortgage
No. 9: Corona del Mar retail center trades hands, a first in 80 years
No. 10: California housing is frozen, but not underwater
