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With half of 2025 now behind us, the Orange County housing market stands at a pivotal point—caught between rising inventory, steady demand, and the ever-present influence of mortgage rates.

The first half of the year brought clarity:
→ Mortgage rates started above 7% and have hovered between 6.6% and 6.99% ever since.
→ Demand remains remarkably steady—currently at 1,565 pending sales, nearly identical to last year and 2023.
→ Inventory has surged from 2,401 homes in January to 4,817 today—a 101% increase.
→ Market time has stretched to 92 days, the slowest July pace since 2019.
→ Homeowners are still hesitant to sell due to locked-in low rates, but more are entering the market than in 2023 or 2024. 

Where we go next depends on one thing: mortgage rates.

If rates remain elevated:
Expect a slow drift toward longer market times, more price adjustments, and continued buyer-friendly negotiations through the end of the year.

If rates drop below 6.5% for an extended period:
We could see a notable uptick in buyer activity, especially from Millennials and Gen Z, which could stabilize home values and reduce market time. We saw this play out last fall when a brief drop in rates led to a 14% surge in demand.

What we’re seeing now:
→ Inventory growth has cooled slightly—likely a holiday pause—but remains high.
→ Buyer activity softened in early July but is expected to pick back up.
→ Market conditions are favorable for buyers—negotiation leverage is high.
→ Sellers are more active this year, offering more opportunities for well-prepared buyers.
→ If rates shift, so will the entire market dynamic.

The Orange County housing market is at a crossroads. The second half of 2025 will be shaped not by panic or hype, but by patience, preparation, and close attention to economic signals.As always, I’m here to guide you with data, not drama. Call or text me anytime at 949-463-0400.

Orange County Housing Market Summary:

·      INVENTORY: The active listing inventory in the past couple of weeks decreased by 77 homes, down 2%, and now sits at 4,817. Last year, there were 3,052 homes on the market, 1,765 fewer homes, or 37% less. The 3-year average before COVID (2017-2019) was 6,708, which is 39% higher. From January through June, 25% fewer homes came on the market compared to the 3-year average before COVID (2017-2019), 5,562 less. Yet, 2,192 more sellers came on the market this year than last, and 4,232 more compared to 2023.

·      DEMAND: Buyer demand, the number of pending sales over the prior month, decreased from 1,614 to 1,565. Last year, there were 1,624 pending sales, 4% higher than today. The 3-year average before COVID (2017-2019) was 2,582, which is 65% higher.

·      MARKET TIME: With demand falling faster than supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased slightly from 91 to 92 days in the past couple of weeks, its highest July level since 2019. Last year, it was 56 days, substantially faster than today. The 3-year average before COVID (2017-2019) was 78 days, which is also significantly faster than today.

·      LUXURY: In the past two weeks, the Expected Market Time for homes priced between $2.5 million and $4 million decreased from 170 to 167 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 251 to 318 days. For homes priced above $6 million, the Expected Market Time increased from 330 to 410 days.

·      DISTRESSED HOMES: Short sales and foreclosures combined, comprised only 0.3% of all listings and 0.3% of demand. Only nine foreclosures and five short sales are available today in Orange County, with a total of 14 distressed homes on the active market, up two from two weeks ago. Last year, seven distressed homes were on the market, similar to today.

·      CLOSED SALES: There were 1,819 closed residential resales in May, down 14% compared to May 2024’s 2,127 and down 2% from April 2025. The sales-to-list price ratio was 98.7% for Orange County. Foreclosures accounted for 0.2% of all closed sales, and short sales accounted for 0.1%. That means that 99.7% of all sales were sellers with equity.