Orange County 2026 Real Estate Forecast and Housing Market Predictions

National real estate trends set the stage for what we'll experience locally in Orange County. (Keep reading for our local OC real estate predictions.) Industry forecasters from Realtor.com, Redfin, NAR, and other leading sources have analyzed the data, and their 2026 predictions paint a picture of steady, measured improvement rather than explosive growth.​

Mortgage Rates Expected to Decline Modestly

Mortgage rates are projected to average around 6.3% throughout 2026, down from the 6.6% average seen in 2025. This represents a modest but meaningful decline that should help improve affordability for homebuyers. The National Association of Realtors predicts rates could average closer to 6% by year-end. While these rates remain well above the pandemic-era lows, even small decreases can unlock substantial buyer activity and make homeownership more accessible for qualified buyers working with top Orange County real estate agents.​

The gradual rate decline stems from several economic factors, including a weaker labor market prompting Federal Reserve rate cuts, slowing economic growth, and the end of quantitative tightening. Inflation will continue to influence rates more than any Fed leadership changes, and while rates may occasionally dip below 6%, they won't stay there for extended periods.​

Home Prices to Rise Slowly, Improving Real Affordability

National home price forecasts for 2026 range from 1% to 4% growth, with most economists predicting modest appreciation between 1% and 2.2%. This represents a significant shift from the double-digit appreciation seen during the pandemic years. Realtor.com projects a 2.2% increase in the median home price, while Redfin predicts just 1% growth.​

What makes this particularly significant is that inflation is expected to exceed home price growth, meaning real (inflation-adjusted) home prices will actually decline slightly for the second consecutive year. This gradual normalization helps incomes catch up to housing costs, improving affordability even as sticker prices continue to rise. Wages are projected to grow faster than home prices for a sustained period, marking the first time this has happened since the aftermath of the Great Recession.​

Home Sales to Increase After Years of Stagnation

Existing home sales projections vary widely among economists, reflecting uncertainty about economic conditions. Forecasts range from a conservative 1.7% increase (Realtor.com) to an optimistic 14% jump (NAR), with most predictions falling in the 3-9% range. Even with these increases, sales will remain below historical norms, as 2024 marked a near 30-year low in home sales.​

The uptick in sales will be driven by pent-up demand, slightly improved affordability, and more buyers who've been sitting on the sidelines finally entering the market. However, many house hunters will remain priced out due to still-high costs and a softer labor market. For those ready to make a move in Laguna Hills or surrounding communities, working with experienced local agents will be crucial for navigating this evolving market.​

Inventory Continues Recovery But Remains Below Normal

For-sale inventory is projected to increase 8.9% in 2026, marking the third consecutive year of gains. While this represents continued improvement, the pace of recovery has slowed as the market edges closer to pre-pandemic norms. By year-end, nationwide inventory levels are expected to remain roughly 12% below pre-2020 averages, an improvement from the 19% gap in 2025.​

The national housing market will remain in balanced territory in 2026, averaging 4.6 months of supply across the year. This balance tilts slightly toward buyers as inventory growth outpaces sales growth, giving buyers more negotiating power than they've had in recent years. However, the market remains deeply uneven, with the upper end seeing robust inventory and strong activity while lower-priced homes face continued constraints.​

Affordability Improves as Monthly Payments Decrease

For the first time since 2020, the typical monthly payment to buy the median-priced home is expected to fall, declining 1.3% year over year. Combined with rising incomes that outpace inflation, the monthly payment is projected to slip to 29.3% of median income, falling below the 30% affordability threshold for the first time since 2022. These gains may be modest, but they mark an important shift toward better conditions for homebuyers searching in Dana Point and other coastal Orange County communities.

The Orange County real estate market continues to demonstrate resilience and strength, with local trends that reflect both national patterns and unique regional dynamics. Our market data through November 2025 shows continued price appreciation and increasing sales activity that bodes well for 2026.

Demand continues to drive prices higher in Orange County. Year to date as of November, the 12-month median sale price for Orange County homes was up 3% annually, outpacing many national predictions and demonstrating the enduring appeal of Southern California coastal living. This appreciation reflects the limited supply and high desirability of communities like Laguna Niguel, Mission Viejo, and Laguna Beach.

Activity is also increasing locally. Orange County saw 3.6% more closed sales in September through November compared to the same three-month period in 2024. This uptick in sales aligns perfectly with the lowest mortgage rates of 2025, confirming what the data shows: even small rate improvements can stimulate buyer activity and get deals across the finish line.

More active listings means slightly more time on the market for sellers. The median Orange County listing spent 18 days on the market in the past 12 months, up 50% from 12 days in the same period of 2024. While this represents an increase, 18 days remains quite fast relative to historical norms and reflects the limited listing supply that characterizes Orange County communities. Market conditions vary from one neighborhood to the next, but no matter the demand in your local area, smart pricing and presentation make the difference between a quick sale for top dollar and a less successful outcome.

Looking ahead to spring 2026, we predict an increasingly active and competitive market, especially if mortgage rates remain stable or continue falling. Buyers who've been waiting for the right moment will find more opportunities in our portfolio of active listings and luxury properties, while sellers who price strategically and present their homes well will benefit from sustained demand. For homeowners curious about their property's current value in this evolving market, our free home valuation can give you data-driven insights specific to your property.

The spring selling season typically brings the most activity, and with mortgage rates expected to average lower in 2026 than they did during spring 2025, we anticipate strong buyer turnout. Multiple offers may return for well-priced, well-presented homes throughout Orange County.

Trends are one thing, but your life is another. Real estate is not just a national or local market statistic. It's a deeply personal financial and lifestyle choice that affects your daily life, your family, and your future.

The 2026 real estate market may bring gradual improvements in affordability and more balanced conditions, but the right time to buy or sell depends entirely on your individual circumstances, not just market forecasts. Major life changes like a growing family, a new job, retirement plans, or changing lifestyle needs often matter more than whether rates tick down another quarter point.

If it feels like the right time for you to buy or sell a home, our team is here to help you make informed decisions around whether, when, and how to do it. We provide to-the-minute market information for Orange County neighborhoods combined with deep experience in our local communities. We understand the nuances that make Laguna Beach different from Mission Viejo, and we know which strategies work best in each micro-market.

Some buyers and sellers will benefit from acting sooner rather than later, while others may be better served by waiting. There's no one-size-fits-all answer. What we can provide is honest, data-driven advice tailored to your specific situation, whether you're a first-time buyer stretching to afford your first home, a growing family needing more space, or empty nesters ready to downsize.

The housing market fundamentals remain solid. Mortgage delinquencies sit at historical lows, homeowners have substantial equity, and job growth continues steadily. These strong fundamentals create stability even as the market adjusts to new realities around affordability and inventory.