Orange County Housing Market Update December 2025

The Tide Is Quietly Turning

The housing market doesn’t shift with a dramatic wave or a sudden crash. It moves like the tide, inch by inch, slowly reshaping the shoreline until one day everything looks different. That is exactly what is happening in Orange County right now. Not a surge, not a drop, but a gradual turn driven by something we haven’t felt in three years, improving affordability.

Hi, it’s Christopher and Broox Mahr with MMG Real Estate Advisors, your local Orange County Realtors with your market update for December 2025.

Before we dive in, here’s what you’ll learn. How mortgage rates quietly improved affordability for three straight months. Why demand is rising compared to the past two years. Why inventory is dropping faster than normal heading into the holiday season. How the luxury market is gaining momentum again. And what these shifts mean as we move toward the Spring Market of 2026.

Affordability Is Quietly Improving, And It’s Changing the Market

For nearly three months, mortgage rates have held between six percent and six point five percent. This is the lowest level in more than a year and the longest stretch below six point five percent since August 2022. The change didn’t happen overnight. It followed a slow, steady pattern.

At the end of May, rates were above seven percent. In June, they dipped under six point seven five percent. By early September, they broke below six point five percent and stayed there. That shift has started improving affordability even if most buyers haven’t realized it yet.

Using a one million dollar mortgage as an example shows how meaningful this change is. At seven percent, the monthly payment is six thousand six hundred fifty three dollars. At six point two five percent, that payment drops to six thousand one hundred fifty seven dollars, saving almost five hundred dollars a month. At six percent, it falls to five thousand nine hundred ninety six dollars. At five point five percent, it drops to five thousand six hundred seventy eight dollars, nearly one thousand dollars less than the seven percent payment.

After three years of affordability erosion, the tide is finally moving in the opposite direction.

Demand Posts the Strongest Late November Reading Since 2021

Demand now sits at one thousand three hundred ninety six pending sales. That’s two percent higher than last year, thirteen percent higher than 2022, and sixteen percent higher than 2023. Demand is still thirty seven percent lower than 2021, but for the first time in years, the trend is rising instead of falling.

Rates have stayed below six point five percent for nearly three months, double the stretch we saw last fall. And for the first time in several years, affordability is improving during the fall and holiday season instead of after it. Demand will dip in December and early January, as it always does, but conditions are lining up for a stronger than normal rebound entering 2026.

Inventory Is Dropping Faster Than Any Other Point This Year

Inventory declined by two hundred six homes in just two weeks, a five percent drop, bringing the total down to three thousand eight hundred ninety seven homes. This is the lowest level since March and the largest two week decline of 2025.

Several factors are driving this drop. November and December are the slowest months for new listings. Many unsuccessful sellers pull their homes off the market during the holidays. Homeowners with low mortgage rates continue to hunker down. And only twenty six thousand two hundred forty six sellers listed this year through October, which is twenty six percent below normal levels.

Inventory will keep falling into January. The three year pre COVID average was five thousand three hundred fifty nine homes. Today’s inventory is thirty eight percent lower than that baseline.

Expected Market Time Remains Stable for a Late Year Market

With supply down five percent and demand down six percent, Expected Market Time rose slightly from eighty three to eighty four days. This is the highest late November reading since 2018. Attached homes are now at ninety four days, up from ninety two, while detached homes remain steady at seventy seven days.

This pace is slower than the frenzy years, but completely normal for a balanced late year market. Last year EMT was seventy four days, slightly faster, and the pre COVID average of eighty five days is nearly identical to today’s pace.

The Luxury Market Shows Its Strongest Momentum Since Spring

Luxury is waking up again. Inventory above two point five million dollars dropped from nine hundred seventy three to eight hundred seventy five, a ten percent decline in just two weeks. Demand softened slightly from one hundred seventy three to one hundred sixty eight, but inventory fell much faster, tightening conditions.

Expected Market Time for luxury homes improved from one hundred sixty nine days to one hundred fifty six days, its best reading since March.

Breakdown by price range shows the same momentum.

• Two point five million to four million, EMT improved from one hundred forty three to one hundred twenty six days.

• Four million to six million, EMT improved from one hundred forty seven to one hundred forty three days.

• Six million plus, EMT improved from two hundred eighty two to two hundred seventy three days.

At the current pace, a newly listed luxury home would go pending around April 2026.

Key Takeaways for Buyers and Sellers

For sellers, pricing is everything. Inventory is declining, but buyers remain selective. This is not a distressed market. More than ninety nine percent of recent sellers had equity. But it is a market where overpricing leads to sitting. Price correctly and you will still sell, even in December.

For buyers, a crash is not coming. The tide is turning slowly. Rates have already improved affordability for three straight months, and the Spring Market will bring more competition. If you find a well priced home now, you are competing with fewer buyers and securing a rate environment expected to hold steady through 2026.

Bottom Line

The market is not booming like the frenzy years, but it is not showing any signs of a crash. Instead, it is shifting quietly, just like the tide. Mortgage rates have stabilized at their lowest level in more than a year, affordability is improving, inventory is falling, and the luxury sector is strengthening. By spring, the market will look different, and for the first time since 2021, that shift will be driven by improving affordability rather than fading affordability.

If you’re thinking about buying or selling in Orange County, reach out anytime. Timing and strategy matter more than ever, and we’re here to guide you with facts, not fear.