5.2% fewer California homes closed escrow in August 2025 compared to the same month a year earlier, according to Redfin. This continues the deflated sales trend which began mid-2022.
Buyer behavior has been adversely affected by trends in real estate related activities over the last three years along with job uncertainty now inducing general concern about the immediate future. Most recently, mortgage interest rates — which swiftly rose after the pandemic era and remain elevated — reduced both buyer purchasing power and willingness to take on debt. Sellers have noticed as property prices on closed transactions have been static, not even rising with consumer inflation since 2022, and are now slipping.
The shift from a seller’s market to a buyer’s market has its roots in the zero-lower bound mortgage rates of 2013. That cyclical money market condition caused mortgage rates to reverse course, destined to rise during the coming couple of decades.
Meanwhile, inventory of homes for sale, excluding the two-year pandemic event, experienced a buildup in the number of homes available. Buyers are now standing by, watching and waiting to see prices hit a bottom. Only then will buyers return without the concern property prices will drop further, a resolution to the rise in both mortgage rates and inventory available for sale.
Recently California home prices have stagnated, threatening to decline on a month-to-month basis during the remainder of 2025. However, due to the price increases experienced prior to peaking in early 2022, home prices are still well above the historical mean price trendline.
Chart updated 10/6/25
Aug 2025Aug 2024Aug 2023Home sales volume24,00025,30025,300Year-over-year change-5.2+0.3-13.6
Comparing the years
As depicted in the chart above, the sales volume fluctuates month to month. Historically the highest sales volume occurs before mid-year as homes available for sale during the busy spring-nesting season sell and then close escrow. However, California has seen disappointing spring bounces beginning with spring 2022.
Another small increase in sales volume typically takes place in December, as homebuyers and all transaction providers seek to wrap up their financial activities before the end of the year. Home sales closings cyclically bottom annually during the slow winter months of January and February.
Volatile month-to-month sales volume movement does not constitute a trend. Monthly data is not likely to indicate the direction the real estate market is taking. For example, real estate agents are not to be concerned when they hear of falling sales volume in the latter half of the year, as this is a normal seasonal progression. And don’t get excited about spring highs as a trend. Only by averaging for periods of several months, then comparing the data from that period against parallel data from the prior period, such as averages for six months or one-year periods, do you eliminate the distraction of spring and winter sales volume, called noise.
What’s more important to watch is year-over sales comparing a month or other period (such as year-to-date) with the same month or year-to-date period from the prior year.
Thus far in 2025, the number of homes sold monthly has run nearly equivalent to the same months in 2024, before faltering with a drop during August. While not yet a trend, firsttuesday does expect this August event to continue and result in sales volume falling significantly below recent years, not likely to bottom until 2028. Eventually, the return of speculators – or government stimulus as in 1975 and again in 2020 – will put an end to declining sales volume and pricing.
In order to encourage significantly more homebuyers to return to the housing market and bring on a growth in sales volume, home prices first need to find a clear price bottom. As our market heads through the remainder of our real estate recession, this dip in home sales volume is not expected to be steep like the plummeting of sales volume heading into the 2008 recession. The reason is that since 2021 sales prices are at the same level today as then, but the mean price for property value has increased some 15% in the meantime.
Thus, expect sales volume to continue in decline through 2026 and 2027, but not in a market-devastating way since this trend has been underway since early 2022. Expect sales volume to begin a sustained rise after 2028.
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California home sales volume
