Orange County’s housing market has seen a significant downturn, with home sales declining 31% over the past three years. This shift aligns with broader changes in the U.S. economy, particularly those influenced by the Federal Reserve’s monetary policies aimed at curbing inflation.
Home Sales Reach Historic Lows
According to Attom’s March 2025 report, Orange County recorded 2,157 home sales, covering both existing homes and new construction. This marks the third-lowest sales total for March since 2005 and represents a 27% drop compared to the month’s 20-year average.
When looking at the longer term, monthly average home sales since March 2022 — the start of the Federal Reserve’s current rate-hiking campaign — have dropped to 2,087 homes. That’s down from a monthly average of 3,031 in the three years prior (2019–2022), reflecting a 31% decrease and coming in 23% below the long-term average.
Broader Housing Trends in California and Nationwide
The sales decline is not limited to Orange County. Since the Federal Reserve began raising interest rates:
- California home sales have declined by 29%.
- National home sales have decreased by 22%.
Home Prices Hold Steady Despite Slowdown
Despite reduced sales activity, Orange County home prices have not declined. In fact, the median selling price in March 2025 was $1.2 million, matching the previous peak set in May 2024. Over the past year, prices have increased by 4.3%, and over six years, they’ve risen by 70%.
Mortgage Payments Surge
The cost of financing a home has risen sharply. Since March 2022, mortgage rates in Orange County increased from 4.3% to 6.7%, while home prices rose 19%. As a result, estimated mortgage payments have surged by 57% over that three-year span.
In contrast, during the previous three years (2019–2022), interest rates fell to a historic low of 2.9% before rising again to 4.3%. Home prices rose by 43% during that time, but payment increases were limited to 42%.
Widening Affordability Gap
Home affordability has eroded dramatically:
- Over six years, estimated monthly mortgage payments have increased by 122%.
- Incomes in Orange County rose just 25% during the same period.
According to the California Association of Realtors, only 12% of Orange County households could afford to buy a home in Q1 2025, as reported by The Orange County Register. That figure stood at 24% six years earlier; the long-term average since 2006 has been 21%.
To close the current affordability gap, data estimates suggest one of the following would be required:
- A 44% drop in home prices,
- Mortgage rates are falling to 1.8%, or
- A 77% increase in household incomes.
The Orange County housing market is experiencing a sharp downturn in sales volume amid steady home prices and rising mortgage costs. These trends have created a significant affordability challenge for prospective homebuyers, with fewer households able to qualify for a mortgage under current conditions.
Stay informed and ahead of the curve — explore more industry insights and program opportunities at ProgramBusiness.com.