The California housing market is a challenging but opportunistic region for builders. Many markets in the Golden State are characterized by affordability and limited supply, however, California is home to several of the largest new-home markets in the United States. Riverside-San Bernadino ranked as the 11th largest metro on Zonda’s 2025 Local Leaders list while Los Angeles was the 29th largest market by closing volume.
The Zonda Dealmakers event in California will highlight the dynamics impacting the new-home sector in the state and the factors to watch moving through 2026.
Los Angeles saw decreased detached and attached new-home sales in 2025, San Diego experienced a decline in starts and closings in the latter part of 2025, while Riverside experienced a mixed year with detached new-home sales decreasing and attached sales increasing.
“Top housing markets in California typically show more sensitivity to changes in mortgage rates compared to elsewhere in the country so it’s not surprising that starts and sales slowed last year” said Ali Wolf, chief economist for Zonda and NewHomeSource. “What works against the market at certain times of the cycle can work in its favor at others, though; marginal declines in mortgage rates can noticeably improve affordability and help price in more households.”
At the California Dealmakers event, Zonda advisory experts, including Wolf, Tim Sullivan, Nicollette Chapman, Mollie Carmichael, Peter Dennehy, and Bob Mirman will discuss the regional and national housing landscape. Additionally, representatives from Brookfield Residential, Richmond American Homes, Trumark Homes, and Century Communities will share insights from on the ground in California.
Below are additional highlights from the top California markets ahead of the event.
Strengths
Los Angeles is home to 11 Fortunate 500 headquarters, making the market a strong employment hub in the engineering, aerospace, retail, manufacturing, finance, and entertainment sectors. The ports of Los Angeles and Long Beach also handle a combined 30% of U.S. container traffic, anchoring the LA market as a global trade hub.
Buyers in the Riverside-San Bernardino market paid a negative premium for detached new homes versus detached existing homes for most of 2025. The relatively affordably Inland Empire housing market remains a popular market for households priced out of coastal California markets.
Builders in San Diego will benefit from a recently approved plan to speed up home construction, relaxing historic preservation regulations. The policy, unanimously approved by the San Diego Planning Commission, limits the ability of project opponents to use rules to block or postpone development.
Weaknesses
New-home closings and starts decreased noticeably in Los Angeles in 2025, down 30% and 24%, respectively. Annual new-home closings and starts are at their lowest levels since mid-2012 in the metro.
Annualized closings also declined significantly in Riverside-San Bernardino (-27% year over year). Additionally, since one in five residents commute outside of the Inland Empire for work, the market also suffers from congested freeway traffic.
The average list price of new detached homes in San Diego has steadily declined since the spring, a headwind for builders in the market.
Home Price and New-Home Market
The highest volume of activity in Los Angeles has occurred for prices north of $1.6 million and the average list price for both attached and detached product are near 24-month highs. The Zonda New Home Pending Sales Index (PSI) was down 12.4% on an annual basis while the median price for new homes sits at approximately $975,000.
List prices have held steady at moder moderate price points in Riverside-San Bernardino ($595,000 for new homes). The PSI for the market declined 9.4% on an annual basis, according to the most recent data. Builders in the Inland Empire average a monthly sales rate above both the national rate and California rate.
In San Diego, the median new-home price ticked up 2% to $1 million while the market’s PSI increased 16.7% on an annualized basis. Annual starts in the market have posted higher volumes than closings in each quarter dating back to the beginning of 2024, meaning builders have inventory to work through.
The California Dealmakers event takes place March 5 at the Westin South Coast Plaza. Register here.
