The 2026 real estate market in Los Angeles promises to provide continued opportunity for buyers and sellers alike who are informed and well-prepared. 2025 was a challenging year for the overall economy, and was particularly challenging for the Los Angeles real estate market given the impact of the fires at the beginning of the year. Despite these challenges, the market remained resilient and showed consistent year-over-year growth. Looking forward to the 2026 real estate market, we expect continued growth as tariff concerns and interest rates ease.
Los Angeles Real Estate Market Shows Resilience Despite Economic Uncertainty
In our 2025 forecast, we predicted a healthy market showing stability and predictability, which is precisely what happened throughout the year. The market showed consistent 2-3% year-over-year growth almost every month, with some months trending slightly higher and others trending slightly lower. The only month in which prices trended lower than the prior year was December, which is likely attributable to a normal seasonal downturn in activity. The continued growth is notable in the face of economic uncertainty created by the new administration’s imposition of significant tariffs, as well as the local disruption caused by the Palisades and Alta Dena fires. We expect this trend to continue in the 2026 real estate market.
The brown line in the graph below depicts the monthly median sale price of existing single family homes in Los Angeles in 2025.
Data courtesy of California Association of Realtors.
Mortgage Interest Rates Drop As Fed Eases Target Interest Rate
While mortgage interest rates started the year at close to 7%, they closed out the year at their lowest point in recent history. The average rate of a 30-year mortgage closed the year out at 6.15%, and has continued to decline since then. The drop in rates is attributable to the Federal Reserve slashing the target interest rate three times, as well as continued overall economic growth. As the current administration continues to put pressure on the Federal Reserve to cut interest rates, we expect the 2026 real estate market to show much of the same.
The graph below depicts the average weekly interest rate on a 30-year fixed rate loan over the past five years.
Data courtesy of Freddie Mac.
2026 Real Estate Forecast
In the 2026 real estate market, Los Angeles is poised for another year of measured growth as modest declines in interest rates subtly improve affordability and buyer confidence. Mortgage rates are expected to continue to ease, gently unlocking demand without a return to the ultra-low rates of the pandemic era. Inventory constraints will likely persist, keeping supply relatively tight amid ongoing housing shortages that have long defined California markets. Against this backdrop, home prices in Los Angeles are forecast to continue their moderate upward trajectory, supported by steady buyer interest and limited listings. While broader economic uncertainties could temper transaction volume, the combination of slightly lower rates and sustained demand suggests a balanced environment where prices rise without dramatic volatility. Sellers adapting expectations to current conditions and buyers capitalizing on easing financing costs will both shape the rhythm of the market throughout the year.
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.
