California housing market is forecast to see modest growth in 2026, with sales rising about 2% and median prices reaching new record levels. Lower mortgage rates near 6% are expected to improve buyer affordability and support increased housing demand across the state. Inventory levels are projected to rise slightly, easing competition but not enough to shift the market away from overall seller advantage. Economic uncertainty, inflation, and insurance costs remain key risks, but overall market sentiment is expected to improve gradually through 2026.