Home Sales Sink at 6.86% Mortgages as Prop 1 Bond Promises Fix

Prices are still near $900,000 while sales fall, and the state’s answer is more borrowing and more subsidy.

SACRAMENTO, California (Surf Revolt) – California homebuyers are caught between a price that will not come down and a borrowing cost that keeps going up. The California Association of Realtors reports that the statewide median price for a single-family home was $899,720 in September, while the average 30-year mortgage rate climbed to 6.86 percent. Voters, meanwhile, were asked to approve tens of billions of dollars in new state bonds to make housing affordable. The numbers suggest that the state is treating the symptom while leaving the cause alone.

The September numbers

According to Mortgage Professional America’s report on the Realtors’ data, existing single-family sales ran at a seasonally adjusted annual rate of 260,410 units, down 6.5 percent from a year earlier and 3.4 percent from August. Sales have now stayed below 300,000 units for 48 straight months. The median price slipped 0.2 percent from August but was up 1.7 percent from a year earlier, the fifth straight month of annual gains.

• Statewide median price: $899,720
• Annual sales pace: 260,410 units, down 6.5 percent from a year earlier
• 30-year fixed mortgage rate: 6.86 percent, up from 6.35 percent a year earlier
• Unsold inventory: 3.7 months
• Southern California sales: down 9.1 percent from a year earlier

The mortgage figure matters most. The Realtors, using Freddie Mac survey data, put the average rate at 6.67 percent in August and 6.35 percent a year ago, an increase of 51 basis points. On a home near the median price, that difference adds materially to every monthly payment. Regionally, Southern California sales fell 9.1 percent and the Far North fell 9.0 percent, while the Central Coast rose 4.4 percent, the only region to gain.

Frozen buyers, frozen sellers

Jordan Levine, the association’s chief economist, said the drop in pending sales points to further softening in closed transactions in the coming months, but that limited inventory is cushioning prices, so slower sales may not quickly bring comparable price declines. Tamara Suminski, the association’s president, said competition is easing and well-prepared buyers may have more room to explore their options, while acknowledging that affordability remains challenging.

The earlier trend was already visible. A Norris Group market update, citing Yahoo Finance, put the average 30-year rate at 6.69 percent in early September, the highest since June 2025, and cited the Realtors’ July median of $887,680. It also cited ATTOM data showing California ranked third among states in foreclosure starts in July, at 2,540. A state where fewer people can buy, and a few more lose their homes, is not a state that has solved housing.

Sacramento’s answer: borrow more

The ballot offers three bond measures totaling about $44 billion, according to CalMatters’ guide to California’s bond measures. The largest housing item, Proposition 1, would authorize $11.25 billion in general obligation bonds. About $7 billion would go mainly to loans for affordable housing developers, more than $1 billion to homeless housing, $1.25 billion to veterans’ home loans, and $350 million to student dorms. The Legislative Analyst’s Office estimates it would produce some 40,000 new rental units. Supporters include Governor Gavin Newsom, the state Democratic Party, Airbnb and major unions, and CalMatters says opposition is minimal.

Proposition 37 takes a different route, offering down payment help of up to 17 percent of the price of a new home, condo or townhome. CalMatters says roughly 90 percent of renters would qualify, that taxpayers are not expected to repay it directly because private lenders are repaid by homebuyers through interest, and that housing reporter Ben Christopher called it “plainly weird.” A PPIC analyst, Eric McGhee, estimates that anywhere from 60,000 to more than 1.8 million buyers could use it. A range that wide tells you the state does not know how many people it would be subsidizing. Reason also published a roundup of the housing ballot initiatives to watch.

We are writing after polls closed on November 3 and have not verified the outcome, so nothing here reports the tallies. The economics stand either way.

The arithmetic problem

Divide the full $11.25 billion of Proposition 1 by the 40,000 rental units the analyst expects, and the result is roughly $281,000 per unit. That is a ceiling, since some of the money goes to veterans’ loans and dorms rather than apartments, but it is still a striking figure in a state where the core complaint is that homes cost too much. Our argument is that publicly financed housing tends to be slow and expensive because it comes wrapped in layers of rules, review and financing, though the reporting we reviewed does not itemize the cost drivers of Proposition 1 projects.

Demand-side help has its own flaw. A subsidy that lets more buyers bid on a fixed supply of homes tends to raise the price those buyers must pay. The Realtors’ own economist says limited inventory is what is holding prices up, so adding purchasing power without adding homes feeds the shortage it claims to cure.

What would actually help

The libertarian prescription is less exciting than a bond: make it legal to build. Legalize more homes by right, shorten permit timelines, cut fees, and stop letting a single objection stall a project for years. Open the land to supply, and the rate-driven downturn becomes a chance for prices to meet incomes rather than a trap.

The bond debt, by contrast, will be repaid over time by taxpayers, including many who will have had no say in the decision and who may never live in the housing it funds. The housing-market squeeze is real, and the state is borrowing as though that were a plan. Readers who like their California served with jokes can find it at Bohiney Magazine, which covers the Golden State and the rest of America from the comedy side.

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