California housing affordability improves from prior quarter and year

In the third quarter of 2024, housing affordability in California improved slightly due to slower home price growth and more favorable interest rates. According to the California Association of Realtors (C.A.R.), 16% of California homebuyers could afford a median-priced single-family home, up from 14% in the previous quarter and 15% a year earlier. However, this is still far below the peak affordability rate of 56% in 2012.

Interest rates initially dropped at the start of the quarter but climbed back up above 7% by early September, hitting their highest levels since July. Although rates may still decline by the end of the year, the chance of a significant drop has lessened as the economy remains strong and additional Federal Reserve rate cuts are unlikely.

Source: C.A.R.