California & Orange County Housing Market Forecast 2027

By Ramez Malki, Broker — C&R Properties  |  Updated October 26, 2026

The California Association of REALTORS^® released its 2027 forecast in October 2026: slightly more sales, modest price growth and mortgage rates that stay where they are. Below are the numbers, how last year’s forecast actually turned out, and what the statewide outlook means for Orange County, where prices are running well ahead of the state.

The 2027 forecast in one table

The affordability index is the share of California households that can afford a median-priced home. At 20%, four out of five households can’t, which is the core problem that keeps sales below their long-run norm.

C.A.R.’s economic assumptions for the U.S. in 2027: GDP growth of 2.2%, job growth of 0.4%, unemployment at 4.3%, inflation (CPI) at 2.4%, and real disposable income up 2.0%. In C.A.R.’s words, housing “demand is anticipated to improve modestly in 2027,” while the rate lock-in effect keeps many would-be sellers on the sidelines.

How did last year’s forecast do?

Forecasts miss, and it’s worth knowing by how much before you plan around one. A year ago, C.A.R. predicted 2026 would bring:

The miss came almost entirely from rates. Mortgage rates stayed about 0.6 points higher than expected, and sales and prices came in lower as a result. So the 2027 numbers are best read as “if rates stay near 6.6%.” If rates drop meaningfully, expect more buyers and stronger prices. If they rise, expect the reverse.

Why rates probably won’t fall much in 2027

C.A.R.’s outlook has the Federal Reserve’s policy rate around 4.25% through 2027, easing to 3.75% in 2028 and 3.50% in 2029. A 30-year mortgage rate is roughly the Fed rate, plus the gap between short- and long-term Treasury yields, plus the spread lenders charge over Treasuries. With a policy rate around 4.25%, a yield-curve gap near 1 point and a spread around 1.7 points, you land in the high 6% range.

The practical takeaway: waiting for 4% or 5% mortgage rates is a bet against the forecast. Buyers who find the right home can buy now and refinance if rates fall. Lendia can run that math for you, including what a later refinance would need to save to be worth it.

Why so few people are selling

• 61% of California mortgages carry rates below 4%. Trading a 3% loan for a 6.6% loan is a big payment jump, even when moving to a smaller home.
• Sellers stay longer than ever. The typical California seller had owned for about 15 years, a record. Low rates, low Prop 13 property taxes, capital-gains exposure and a lack of affordable places to move all play a part.
• Sellers are older. The average seller is about 62. That’s why Prop 19 base-year transfers matter: homeowners 55+ can take their low property tax base with them when they downsize.
• Supply can’t catch up. California’s housing goals call for roughly 192,000 new homes a year. The state permitted about 123,000 in 2025.

What buyers want, and a myth worth busting

Among renters, the top reasons they’d buy are lower prices (25%), better personal finances (22%) and having saved a down payment (21%). Yet the median consumer believes you need 20% to 35% down to buy. That isn’t true. Conventional loans start at 3% down for qualified first-time buyers, FHA at 3.5%, and California has down-payment assistance programs. First-time buyers made up 32.6% of buyers, with an average age of 38.

Insurance is the other wild card. California is among the top five states for homeowners-insurance cost increases. New insurance laws take effect in 2027 and 2028; see our homeowners insurance guide.

Orange County: where we start 2027

There’s no official Orange County forecast, so here’s where the county stands heading into the new year, from C.A.R.’s September 2026 county data (single-family detached):

Orange County prices are growing about three times faster than the state’s, with tighter inventory than Los Angeles or the Inland Empire. Sales in OC were down 2.0% from a year earlier, a smaller drop than Southern California’s 9.1%. Our reading: expect Orange County to stay supply-constrained in 2027, with price growth that runs ahead of the statewide 1.4% forecast as long as inventory stays near three months. Homes that are priced right still sell in about a month; overpriced homes sit. For month-by-month detail, see our Orange County market report.

What this means for you

If you’re selling in 2027

• Tight supply still favors sellers in most OC price ranges, but buyers are payment-sensitive. Pricing correctly from day one matters more than in 2021.
• Spring 2027 should be the strongest window if C.A.R.’s modest sales rebound plays out.
• If you’re 55+, run the Prop 19 numbers before you decide you “can’t afford to move.”
• Know your tax picture first: see home-sale taxes in California.

If you’re buying in 2027

• Plan around rates in the mid-6% range, not a big drop.
• Get pre-approved and compare 3%-down, FHA and assistance options before assuming you need 20%.
• Budget for insurance and HOA dues, both rising faster than prices.

Frequently Asked Questions

Will California home prices go down in 2027?

C.A.R. forecasts a 1.4% increase in the statewide median price to $894,400 in 2027, not a decline. Local results vary; Orange County prices were up 5.6% year over year in September 2026.

What will mortgage rates be in 2027?

C.A.R. forecasts the 30-year fixed rate to average 6.6% in 2027, the same as 2025 and 2026.

Is 2027 a good time to buy a house in Orange County?

It depends on your finances and how long you plan to stay. The forecast doesn’t call for big rate or price drops, so waiting may not get you a better deal. Buying now and refinancing if rates fall is one option to discuss with a lender.

How many homes will sell in California in 2027?

C.A.R. forecasts 277,900 existing single-family home sales in 2027, up 3.7% from a projected 268,100 in 2026.

What is the median home price in Orange County?

$1,480,000 for single-family detached homes in September 2026, according to C.A.R., up 5.6% from September 2025.

This article is general information, not legal or tax advice. Laws and figures change; confirm details for your situation with a qualified California attorney or CPA. Ramez Malki is a real estate broker and mortgage professional, not an attorney or tax advisor.