Rising Mortgage Rates Bring Orange County Housing Market to a Crawl

The latest Orange County housing data reveals a market slowing significantly as mortgage rates surge, buyer demand declines, and homes take longer to sell. Over the past six weeks, demand has dropped 18%, while Expected Market Time has climbed to 118 days. Although conditions are becoming more challenging for sellers, limited inventory and strong homeowner equity continue to shape the market.

📊 Inventory Remains Relatively Stable

Orange County’s active listing inventory decreased by just 28 homes over the past two weeks, bringing the total to 4,924 homes, a decline of 0.6%.

Despite the recent decrease, inventory remains 10% higher than last year’s 4,478 homes. However, it is still 28% below the 2017–2019 pre-COVID average of 6,306 homes.

Through September, 23,808 homes had entered the market, which is 27% fewer than the pre-COVID average. Many homeowners continue to hold onto properties with low fixed-rate mortgages, limiting the number of homes available for sale.

Inventory is expected to remain elevated through the Autumn Market as fewer homes move into pending status. Later in the year, listings typically decline as fewer sellers enter the market and some unsuccessful sellers withdraw their homes.

📊 Buyer Demand Falls Sharply

Orange County buyer demand has weakened considerably as rising mortgage rates put additional pressure on affordability.

Demand, measured by the number of new pending sales over the prior month, fell from 1,349 to 1,249 pending sales over the past two weeks—a decline of 100 sales, or 7%. This is the lowest October demand reading since 2007.

Over the past six weeks, demand has dropped by 279 pending sales, or 18%. Demand is now 21% below last year’s 1,582 pending sales and 77% below the 2017–2019 pre-COVID average of 2,206 pending sales.

Mortgage rates have played a major role in this slowdown. After reaching approximately 6% at the end of February, rates climbed to 6.75% in July and then surged to 7.5% by the end of September.

The impact on affordability is substantial. A buyer purchasing a $1.2 million home with 20% down would see the monthly principal and interest payment rise from approximately $5,756 at a 6% mortgage rate to $6,712 at 7.5%—an increase of $956 per month.

📊 How Long Are Homes Taking to Sell?

With inventory declining only slightly while buyer demand falls, Orange County’s Expected Market Time increased from 110 to 118 days over the past two weeks. This represents the time it would take to sell all active listings at the current pace of buyer activity.

Expected Market Time is now 33 days longer than last year’s 85 days and significantly slower than the pre-COVID average of 87 days. The current reading is the highest since April 2020 during the COVID lockdown.

The difference between property types is also notable:

• Condos and townhomes: 139 days, compared with 83 days last year.
• Detached homes: 105 days, compared with 86 days last year.

Detached homes continue to sell more quickly than attached properties, although both segments are experiencing longer market times.

What Does This Mean for Buyers and Sellers?

For Buyers:

The slower market may provide buyers with more time to evaluate properties and negotiate terms. With fewer competing buyers and homes taking longer to sell, opportunities may exist for buyers who are prepared and understand their financing options.

However, affordability remains a significant challenge. Buyers should carefully evaluate monthly payments, mortgage options, and their long-term plans before making a decision. Well-priced homes in desirable locations can still attract attention.

For Sellers:

oday’s market requires a thoughtful strategy. With buyer demand declining and homes taking longer to sell, accurate pricing, excellent presentation, and effective marketing are more important than ever.

Sellers should understand how their property compares with competing listings and recent sales. Preparing a home for the market may also involve deciding which repairs or improvements are worthwhile and which expenses are unlikely to provide a meaningful return.

A well-planned approach can help a home stand out and give sellers the best opportunity to achieve their goals in a more competitive market.

The Bottom Line

Orange County’s housing market has slowed considerably as mortgage rates rise, buyer demand weakens, and Expected Market Time increases.

Yet the number of homes available for sale remains below historical pre-COVID levels, and the market continues to be supported by homeowners with substantial equity. According to the report, distressed properties account for just 0.3% of active listings, while 99.72% of August closed sales involved sellers with equity rather than foreclosures or short sales.

For buyers, the changing market may create opportunities to negotiate. For sellers, success depends on realistic pricing, strong presentation, and a marketing strategy tailored to current conditions.

Thinking about buying or selling?

Countywide statistics are helpful, but your neighborhood, property type, price range and competition can tell a very different story. If you're considering a move, we'd be happy to help you understand what today's market means for your specific situation.

Source: Steven Thomas, Orange County Housing Report: Rates Rise, Housing Stalls, October 12, 2026.