With the third quarter of 2025 behind us, it appears that 2025 will be a year of relative normalcy in the Los Angeles real estate market. The first quarter saw some instability due to imposition of tariffs and the tragic fires throughout Los Angeles, the second quarter saw a period of growth, and the third quarter has been a period of stability. In this 2025 Q3 Real Estate Update we dive into the data, provide our insights into how the market has changed, and discuss our predictions for the remainder of the year.
Los Angeles Real Estate Market Sees Continued “Normal” Growth
The covid-era days of 20% year-over-year gains in the real estate market appear to be officially behind us. The past quarter saw gains of as little as 0.26% in comparison to the same time last year. This relatively mild growth in July can likely be explained by continued high interest rates at that time. As rates lowered into August and September, sales prices saw increases of over 2% in comparison to the same time last year. While the growth remains modest, it highlights the resilience of the market even when loans are borrowed at a premium.
The graph below depicts annual trends in the monthly median sale price of an existing single family home in Los Angeles.
Data courtesy of California Association of Realtors.
Mortgage Interest Rates Drop As Fed Cuts Target Interest Rate
With the Federal Reserve announcing a cut to the target interest rate in September, mortgage interest rates have seen a relatively steep drop. The average interest rate was just below 7% in early July, but has dropped a little over a half a percentage point to 6.3% in early October. According to reporting from Reuters, the Fed will likely be considering additional cuts before year-end in order to battle a stagnant job market.
The graph below depicts Freddie Mac’s data on the average rate on a 30-year fixed rate mortgage, with the tail end depicting the decline in interest rates since July of this year.
Data courtesy of Freddie Mac.
What’s Next?
Heading into the final quarter of the year, the Los Angeles real estate market is likely to remain cautious. An optimistic assumptions is that mortgage rates will gradually decline as inflation cools and the Federal Reserve pivots toward easing. Some aggressive forecasts predict the average 30-year fixed rate could ease into the high 5-percent range by Q4 2025. We believe rates will remain relatively steady or drop marginally, leading to a continued stable market and mild growth in comparison to prior years. We view this as good news and an indication of a stable, “healthy” real estate market.
Please call or email us at 213-973-9439 or info@esquirereb.com to further discuss our 2025 Q3 Real Estate Update for Los Angeles, or how Esquire Real Estate Brokerage can help you in the Southern California real estate market.
