Greater Los Angeles Housing Market Update – February 2026

The housing market continues to shift as interest rates trend downward and affordability slowly improves. While many buyers are still waiting on the sidelines, early signs suggest the market could heat up later this year—especially if interest rates fall further.

Here’s what you need to know about the current housing market conditions across the Greater Los Angeles area and Southern California.

Housing Is Becoming More Affordable

One of the biggest developments in the housing market over the past year has been declining mortgage rates.

As the Federal Reserve has moved toward lowering the federal funds rate, borrowing costs have begun to ease. This has already translated into meaningful savings for homeowners and buyers.

The median monthly principal and interest (P&I) payment on a mortgage is now approximately $2,023 per month, down from $2,130 a year ago—a 5.02% decrease.

Lower monthly payments can give buyers more flexibility. For many households, this means:

• More purchasing power

• Greater affordability

• Extra room in their monthly budgets

At the beginning of December, the average 30-year mortgage rate was about 6.15%, and rates have continued trending downward since then.

Mortgage Rates Are at a Three-Year Low

Mortgage rates have gradually declined over the past several months as lending markets anticipate lower long-term interest rates.

Recently, the average 30-year mortgage rate reached its lowest level in three years, providing welcome relief for buyers and sellers alike.

However, expectations for immediate rate cuts remain modest. Market forecasts suggest the probability of a Federal Reserve rate cut at the next meeting remains low—around 7.9% at the time of this report.

That said, projections indicate we could still see one or two rate cuts later this year, which could further stimulate housing demand.

If borrowing costs drop further before the peak buying season begins, competition among buyers could intensify during the summer months.

Inventory and Sales Activity Remain Stable

Despite improving affordability, overall housing activity has remained relatively stable.

Compared to this time last year:

• Existing home sales: up 1.40%

• Inventory levels: up 3.51%

• New listings: up 0.68%

These modest changes suggest that many buyers are still waiting for mortgage rates to decline further before entering the market.

As the market transitions from the slower winter months into spring and summer, we’ll be watching closely to see if lower interest rates bring those sidelined buyers back into the market.

Southern California Housing Market: The Local Lowdown

Looking across Southern California’s key markets—including Los Angeles, Orange County, San Diego, and Riverside—most areas ended 2025 on a positive note.

Price Growth Returns in Most Markets

Three out of the four major Southern California markets posted year-over-year price gains in December.

• San Diego: Median price reached $1,000,000, up 2.56%

• Orange County: Median price climbed to $1,390,000, up 2.06%

• Riverside: Median price rose to $635,000, up 1.63%

Los Angeles was the exception.

The Los Angeles median home price declined 2.35% year-over-year to $890,910. This follows a strong fall season where prices peaked at $983,230 in September before softening toward the end of the year.

While one month doesn’t define a long-term trend, it’s a development worth monitoring as we move through 2026.

Inventory Is Higher Than Last Year — But Falling Seasonally

Inventory increased significantly across Southern California throughout 2025, peaking during the summer months.

However, as the market moved into winter, inventory began to decline again—following typical seasonal patterns.

Month-over-month inventory declines included:

• Orange County: down 22.19%

• San Diego: down 15.98%

• Los Angeles: down 14.16%

Even with these seasonal drops, inventory levels remain higher than last year:

• Los Angeles: +15.79%

• San Diego: +14.17%

• Riverside: +12.94%

• Orange County: +10.80%

For buyers, this means there are still more options available compared to early 2024, even as supply begins tightening again.

Days on Market Vary Across the Region

The amount of time homes spend on the market differs significantly depending on location.

Current median days on market:

• Riverside: 43 days (+26.47% year-over-year)

• Los Angeles: 33 days (+13.79%)

• Orange County: 30 days (−3.23%)

• San Diego: 27 days (+12.50%)

Riverside continues to see the longest selling times, while Orange County has actually seen a slight improvement compared to last year.

Most Markets Are Back in Seller’s Territory

A key metric for measuring market balance is Months of Supply Inventory (MSI).

Historically, California averages around three months of supply, which represents a balanced market.

• Below 3 months: Seller’s market

• Above 3 months: Buyer’s market

As of December:

• Orange County: 2.1 months of supply

• San Diego: 2.5 months

• Los Angeles: 2.8 months

These markets have shifted back into seller-friendly conditions.

Riverside remains the outlier with 3.6 months of supply, placing it in a balanced to slight buyer’s market.

What to Watch in 2026

Several factors could shape the housing market in the months ahead:

• Potential Federal Reserve rate cuts

• The spring and summer buying season

• New inventory entering the market

• Continued changes in mortgage rates

If borrowing costs continue to fall, we could see renewed buyer demand and stronger competition, especially during the summer months.

Thinking About Buying or Selling?

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Whether you're planning to buy your first home, upgrade, or sell your current property, expert insights and preparation can help you move forward with confidence.