Californians reluctant to buy homes – or new cars

Californians aren’t rushing to buy either homes or new vehicles – a sign of skittish consumers in a wobbly economy.

My trusty spreadsheet reviewed two sets of annual statewide sales data: new-vehicle purchases from the California New Car Dealer Association, covering cars and light trucks, and homebuying reports from real estate tracker Attom, which tallies houses, condos, existing properties, and newly built ones.

Should California financially contribute to the nuclear fusion industry?

Are California’s millennials paid enough?

Californians’ economic hopes drop 23% since Trump election

Will tariffs slow the U.S. economy in 2026?

California falls to world’s fifth-largest economy

Let’s start at the car lot. The association estimates that California dealers will sell 1.79 million vehicles in 2025, a 2% increase from 2024, following a 1% decline in 2024. Politely, that’s flat.

Next, you see home sellers aren’t faring much better.

If current sales continue through the year’s first eight months, 317,000 California residences are expected to be purchased in 2025. That would be down 2% in a year after a 5% increase in 2024.

Look, these kinds of major investments require shoppers to sense some economic stability. But consumer confidence has tumbled statewide as California’s economic thinking collides with Trump administration policies. Hiring and pay raises have stalled. Overall inflation chips away at household budgets.

Affordability is another challenge for both big-ticket purchases. Prices go skyward. The typical new car price topped $50,000. And California is home to more high-priced ZIP codes than any other state.

Additionally, interest rates are burdensome for consumers who typically finance these expensive purchases.

A five-year car loan ran 7.9% at mid-year 2025, according to the Federal Reserve. That’s up from 4.5% in 2022. Meanwhile, in mid-2025, rates on a 30-year mortgage reached 6.8%, according to Freddie Mac. That’s up from 2.9% in 2020.

Below par

These 2025 California sales paces are well off recent highs.

California vehicle sales this year run 12% below the 2.03 million sales level reached in both 2016 and 2017 during the pre-pandemic economic boom. Car buying hasn’t regained its oomph that was lost in supply-chain shortages when coronavirus crimped the global economy.

Homebuyers pulled back even more. Statewide sales are a stunning 42% below the 543,000 peak in 2021, when historically cheap mortgages and the pandemic-era push for larger living spaces exploded purchases. The end of those discounted loans squashed affordability.

Or think about the reluctance of California consumers to make these larger purchases by comparing 2025 sales to post-Great Recession sales norms.

For new vehicles, purchases are 2% above the 15-year average. Homes? Down 24%.

Long tale

John Sackrison, executive director of the Orange County Auto Dealers Association, links his industry’s sluggish sales malaise to the supply chain challenges created during the pandemic.

Factories were short of numerous parts, so to maximize profitability, manufacturers focused on high-end products. That was a successful tactic when production was limited and dealer lots were nearly empty of inventory.

Factory output and car lots returned to a level of normalcy. But car buyers seem hesitant to buy at high prices.

Add in economic anxieties created by last year’s election and this year’s new administration, and you can see why Californians aren’t jumping to buy new vehicles.

So now in 2025, you see manufacturers responding with various types of incentives to move slow-selling models.

“Uncertainty tends to make consumers pull back,” Sackrison says.

Not alone

This is not some California-centric shopping slump.

Nationally, vehicle sales run at a 16.3 million annual pace this year, according to the Bureau of Economic Analysis. That’s down 3% in a year following a 2% dip for 2024.

This year’s car buying is 4% above the 15-year average but 7% below the 2016 peak of 17.5 million.

U.S. house hunters are also lethargic, buying at a pace of 4 million a year in 2025, according to Attom. That’s down 2% in a year, following another 2% dip for 2024.

This year’s homebuying nationwide is 11% off the 15-year pace – and 36% below the 2021 high of 6.3 million.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]