Housing affordability in California climbed to its highest level in four years in the first quarter of 2026, as lower mortgage rates and declining home prices helped more buyers qualify in a still-challenging market.
According to the California Association of Realtors (C.A.R.), 22% of California households could afford to purchase a median-priced existing single-family home in Q1 2026, up from 21% in the fourth quarter of 2025 and 19% one year earlier.
“Declining interest rates and falling home prices made it possible for more Californians to afford a home purchase,” C.A.R. said in the report.
The statewide median price for a detached home declined 3.0% quarter over quarter and 0.5% year over year to $843,390, marking the first annual price drop since mid-2023.
At the same time, the average 30-year fixed mortgage rate fell to 6.24%, helping reduce borrowing costs.
A minimum annual income of $204,800 was required to qualify for the monthly payment of $5,120, including principal, interest, and taxes, on a median-priced home.
While affordability improved, the barrier to entry remains high. The required income level has exceeded $200,000 in 13 of the past 14 quarters, underscoring the persistent affordability challenge across the state.
Condo Affordability Offers Entry Point
More attainable price points in the condo and townhome segment continue to provide an alternative path for buyers priced out of single-family homes.
In the first quarter, 32% of households could afford a median-priced condo or townhome, up from 31% in the prior quarter and 27% a year ago.
The median price for a condo or townhome was $648,000, requiring a monthly payment of $3,930 and a minimum income of $157,200 — significantly lower than single-family thresholds.
California Still Far Less Affordable Than U.S.
Despite the improvement, California remains significantly less affordable than the rest of the country.
Nationally, 44% of households could afford a median-priced home in the first quarter of 2026, compared to just 22% in California. The typical U.S. home required an income of $98,000 — less than half of California’s threshold.
C.A.R. also noted that monthly housing costs in California remain more than double the national level, a trend that has persisted for years.
Racial Affordability Gaps Persist
Separate data from C.A.R. shows that affordability improved across all major demographic groups in 2025, but significant disparities remain.
Overall, 19% of Californians earned enough income to purchase a median-priced home in 2025, up from 18% the prior year.
Affordability was highest among Asian households at 29%, followed by White (non-Hispanic) households at 23%. Both Black and Hispanic/Latino households had affordability levels of 11%, highlighting a persistent gap in homeownership access.
“The pronounced gap in homeownership affordability among Black and Hispanic/Latino households underscores wage inequities and persistent barriers to credit access,” C.A.R. said.
The report noted that without meaningful intervention, these disparities could widen if home prices continue to rise and borrowing costs remain elevated.
