Every October the California Association of REALTORS® (C.A.R.) publishes its forecast for the next year. The 2027 forecast, released October 7, calls for a slow recovery: more sales and slightly higher prices. But it rests on one key assumption: a 30-year fixed rate averaging 6.6% in 2027. A week later, Fannie Mae raised its 2027 rate forecast from 6.7% to 7.5%. If you are buying or borrowing in California, the gap between those two numbers matters.
C.A.R.'s 2027 forecast
| California existing single-family homes | 2025 | 2026 (projected) | 2027 (forecast) |
|---|---|---|---|
| Sales | 271,100 | 268,100 | 277,900 |
| Change in sales | +0.7% | −1.1% | +3.7% |
| Median price | $875,600 | $882,200 | $894,400 |
| Change in price | +1.2% | +0.8% | +1.4% |
| Households that can afford the median home | 19% | 20% | 20% |
| 30-year fixed rate (annual average) | 6.6% | 6.6% | 6.6% |
From C.A.R.'s 2027 California Housing Market Forecast, released October 7. C.A.R. also expects California unemployment to dip from 5.5% in 2026 to 5.4% in 2027, nonfarm job growth of 0.3% in each year, and CPI inflation falling from 3.4% in 2026 to 2.4%.
The longer view helps. California sold 444,600 single-family homes in 2021 and 257,700 in 2023, and has stayed between about 260,000 and 280,000 since. Even at 277,900, 2027 would be only about 63% of 2021 by my rough math. Prices barely fell: down 0.6% in 2023, then small gains each year.
The key question: does the 6.6% assumption still hold?
C.A.R. assumes the 30-year fixed rate averages 6.6% in 2025, 2026 and 2027. Since late February, rates have climbed:
| 30-year fixed rate | Figure | Source |
|---|---|---|
| Late-February low | 5.98% | Freddie Mac (via the Associated Press) |
| Oct. 16, 2025 | 6.27% | Freddie Mac |
| Oct. 15, 2026 | 7.40% | Freddie Mac |
| Q4 2026 forecast | 7.4% | Fannie Mae, October forecast |
| 2027 average forecast | 7.5% | Fannie Mae, October forecast (6.7% in September) |
| 2027 average assumption | 6.6% | C.A.R. 2027 forecast |
The AP reports that 7.40% is the highest since November 2023, and that the 10-year Treasury yield was about 5.10% in mid-October, versus 3.97% before the Iran war began. Inflation has run hotter than expected and markets see a higher chance of a Fed rate hike in December. Fannie Mae's October forecast holds the rate at 7.5% in all four quarters of 2027, and it cut its 2027 forecast for national existing-home sales from 4.22 million to 4.06 million and for national home price growth from 1% to 0.6%.
These are national averages and forecasts, not offers. Your rate depends on your credit, down payment, property type and loan amount.
What 0.9 percentage points means for a budget
My rough math on a 30-year fixed loan (principal and interest only, no taxes or insurance):
- Same loan amount: the payment at 7.5% is about 9.5% higher than at 6.6%.
- Same monthly budget: you can borrow about 8.7% less at 7.5% than at 6.6%.
- Compared with 6.27% a year ago, the same payment at 7.40% supports about 11% less loan.
This is my own calculation to show how rates move budgets, not a loan quote. If 2027 rates really stay near 7.5%, C.A.R.'s sales rebound may come in weaker and prices will have a harder time rising. If rates do fall back near 6.6%, buyers gain close to 10% in buying power.
What California buyers and borrowers can do now
- Budget at today's rate. Don't set a budget on the hope that rates fall next year. If the payment works at today's rate, the budget is safe; if rates fall later, a refinance is an option, though it has costs. Get pre-approved at today's rates.
- Know whether your loan is conforming or jumbo. In 2026, a one-unit loan up to $1,249,125 is conforming in Los Angeles, Orange, San Francisco, San Mateo, Santa Clara and Alameda counties; above that it is jumbo. FHFA usually announces the 2027 limits in late November. More in 2026 California loan limits, and why jumbo rates are lower.
- A slow market means room to negotiate. With sales near their lows, seller credits toward closing costs or a rate buydown are more common; ask for them with the offer.
- Self-employed, investor and foreign national buyers: the program matters more than the rate. Bank statement, DSCR and foreign national loans are underwritten differently; see California home loans.
The latest actual numbers are in California in August: a $901,420 median price. I will update when C.A.R. releases its September report.
I am licensed for home loans in California and Georgia (in California I do loans only, not real estate brokerage) and work alongside your California agent. To see what you can buy at today's rates, send me your situation and we can run the numbers on a 5-minute call or WeChat.
