May 19, 2025 – California's housing market reached a record high median price of $910,160 in April, marking the 22nd consecutive month of year-over-year increases. Home sales, on the other hand, declined for the second time in four months, as economic uncertainty and elevated interest rates continued to beat down on housing sentiment. Despite inflation easing to a four-year low in April, consumers remain worried about the economy as retail sales growth dipped sharply from the previous month. Until we have more clarity on the ongoing trade negotiations, consumers will likely remain cautious about home buying and selling in the near term. Home sales, as such, could remain soft in the next couple of months.

April’s statewide median price reaches a record high: California recorded a new all-time high median price of $910,160 in April, as the state increased on a year-over-year basis for the 22nd consecutive month. The annual gain of 0.7% posted last month, however, was the smallest since July 2023. On a month-to-month basis, the April median price also jumped from the prior month, but the monthly improvement was below the 10-year historical average increase of 4% recorded between March and April. The statewide median price is expected to continue to climb in the next few months if it follows its seasonal pattern, but April’s softer price growth could be an indication that further price moderations may continue as market uncertainties and economic concerns linger on.

California home sales kick off the buying season with a slow start: California home sales retreated in April, dropping from the previous month and declining from their year-ago level for the second time in four months. Sales of existing single-family homes dipped from the prior month by 3.4% and slipped from the same month of last year by 0.2%. Statewide pending sales in April declined from last year’s level for the fifth consecutive month as housing sentiment continued to trend down. On a year-to-date basis, home sales remained up from the first four months of 2024, but the pace of growth decelerated to 1.4% in April from 1.9% recorded the month prior. As consumers continue to express concerns about their financial situations in the year ahead, housing sentiment could deteriorate further in the near term, which may have a negative effect on home sales activity for the rest of the spring homebuying season.

Americans pull back on spending in April: Consumer spending continued to grow but slowed sharply in April after a strong surge in in the prior month as shoppers rushed to beat the new tariffs. Retail sales pulled back last month, with the monthly growth pace inching up by 0.1% in April, a significant pullback from the 1.7% increase recorded in the prior month. On a year-over-year basis, retail sales were still up by 5.2% nevertheless, suggesting resiliency in consumer demand despite tariff concerns. Motor vehicles and auto parts dipped 0.1% after surging 5.5% in the prior month, while sales at sporting goods stores tumbled 2.5% month-over-month. Households continued to spend more dining out last month, with receipts at restaurants up by 1.2% after increasing by 3% in March. Despite a slight uptick in retail sales in April, consumers will likely spend less in the months ahead as their confidence continues to trend down amid worries about trade policy. While the U.S. continues to engage in tariff negotiations with its trading partners, agreements may take months to finalize, and uncertainty could linger on well pass the second quarter.

Inflation slows more than expected and remains at a four-year low: Despite tariff-related price pressure building, U.S. inflation slowed to the lowest level in more than four years in April. Headline Consumer Price Index (CPI) was up 2.3% from a year ago last month, an increase slightly lower than economists’ prediction of 2.4%, and was the lowest level since February 2021. Core CPI registered a year-over-year gain of 2.8% in April, unchanged from its yearly growth rate in March, and reached the lowest level since March 2021. Used vehicle prices dropped for the second straight month by 0.5%, while prices on new vehicles were flat. Shelter costs rose 0.2% month-over-month and were up 4.0% year-over-year, but the gain was the smallest since November 2021. In general, the April CPI figures were relatively tame, and the tariff impact did not seem to have kicked in. The pull forward in consumer spending and the inventory stockpiling at the end of Q1, however, might have delayed the tariffs’ upward pressure on prices. With tariffs remaining in place and companies’ profit margins continued to be squeezed by higher costs due to rising import taxes, economists expect inflation to rise soon as those higher costs spill over to consumer prices. 

Housing starts improve but drop in permits suggests further slowdown ahead: U.S. housing starts bounced back in April and partially offset some of the losses registered in March, according to the latest report released by the Census Bureau. Total housing starts increased 1.6% month-over-month after falling 10.1% in the prior month but dipped slightly by 1.7% from the same time last year. Single-family housing starts fell 2.1% from March to the lowest level since July 2024 and were down 12% from the same month of last year. Housing permit data also painted a not-so-encouraging picture for the construction industry in the near term, with total permits in the U.S. down 4.7% month-over-month and single-family permits down 5.1% from March. In the West region, total permits issued went up by 3.4% from March but single-family permits issued slipped 2% from the prior month. Housing starts, however, plummeted in the West by 16.1% month-over-month for total and dropped 18.7% for single-family units. With builder confidence trending down as waning housing demand, rising material costs, and labor supply shortage remain concerns for developers, construction activity is expected to be soft in coming months.

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