California faces pileup of unsold homes

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California's housing market is experiencing a buildup of unsold homes.

Mike Simonsen, the chief economist at real estate platform Compass, said in a post on X that there are currently 37 percent more unsold single family homes on the market in California than last year—a level not seen since 2018.

The surge in unsold homes signals growing challenges in California's housing market, where affordability has long been a major issue.

California's supply of unsold homes has been growing for several years, but the increase has become even more pronounced in 2025.

Simonsen queried why this was happening in the state at this moment in time.

He pointed out that while other states such as Florida, Texas and Arizona have seen rising inventory too, the factors behind this are clearer as these areas are now grappling with low migration from other states.

However, he noted that California has dealt with net negative migration for some time yet unsold inventory has only recently started rising.

Simonsen did not provide his own guesses as to the reasons behind this shift, but shared two plausible theories that commenters had provided.

These were that California job market is "deteriorating faster" than other places, and that several "demand-side cash programs" are ending this year.

He is likely referring to government programs that help buyers with expenses related to purchasing a home, which are especially crucial in high-cost markets like California.

California Governor Gavin Newsom's 2024-25 state budget proposal in January reduced $1.2 billion in funding for various housing-related programs.

A Realtor.com report from May had also reported that active home listings in California surged to over 64,900 in April, a 50 percent increase compared with the previous year. It added that this was greater than the 31 percent rise nationally.

The real estate listings website pointed to the high prices of homes as a major factor, as the median home costs eight times the annual income of a typical household.

Nick Gerli, founder and CEO of real estate data startup Reventure App, told Realtor.com: "It's very realistic to expect that, based on the more than 50% year-over-year inventory increase in some of these California markets, we're going to see a big slowing in home price growth over the next 12 months."

Some housing analysts are watching to see if the surge in unsold inventory will put downward pressure on home prices in California, leading to prices stagnating or even falling, according to Realtor.com.

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