The Orange County housing market is beginning to show signs of improved buying conditions as we move into early 2026. With mortgage rates declining and housing inventory gradually increasing, buyers are gaining more opportunities and slightly improved affordability compared to the past few years.
Active housing inventory has increased by 177 homes in the past two weeks, bringing the total number of available homes to 3,531. This represents an 11% increase compared to the same time last year. While inventory is still significantly below pre-COVID averages, the recent increase is giving buyers more options—particularly in lower and mid-price ranges.
Entry-level housing supply has expanded the most. Homes priced under $500,000 have increased by 44%, homes between $500,000 and $750,000 are up 35%, and homes priced between $750,000 and $1 million have increased by 21%. This growth is helping first-time buyers and move-up buyers find more opportunities in the market.
Mortgage rates have also improved affordability. Rates have recently dropped to around 6%, the lowest level since 2022. For example, the estimated monthly payment on a $1 million home at 7% interest is approximately $5,322 per month. At 6% interest, that payment drops to about $4,796—saving buyers roughly $526 per month or more than $6,000 annually. With this improvement in affordability, buyers targeting a $5,000 monthly payment can now afford roughly $102,500 more in home value than they could last year.
Buyer demand has increased slightly, with pending sales rising by 2% to 1,542 homes. However, demand remains well below pre-COVID levels, as economic uncertainty and global events continue to impact buyer confidence.
The pace of the market remains relatively steady. The Expected Market Time—how long it takes for homes to sell—has increased slightly from 67 to 69 days. Detached homes currently average about 67 days on market, while attached homes such as condos and townhomes average about 71 days.
In the luxury segment, homes priced above $2.5 million continue to move at a slower pace. Luxury inventory has increased to 854 homes, while buyer demand rose to 173 pending sales. As a result, the expected market time for luxury properties currently sits at around 148 days.
Distressed properties remain extremely rare in Orange County, representing only 0.1% of active listings and 0.2% of buyer demand. Currently, only four distressed homes are on the market.
Overall, the market is gradually stabilizing. Buyers are benefiting from increased inventory and improved affordability, while sellers are still seeing steady activity. As the spring season approaches, the balance between rising inventory and improving buyer demand will determine how competitive the market becomes in the months ahead.
