Orange County Housing Market Update: Pending Home Sales Hit a Seven-Month Low

Orange County's housing market is showing clearer signs of slowing as mortgage rates remain above 7% and fewer homes move into escrow.

According to the September 21 Orange County housing report from Orange County Real Estate, Inc., the number of homes pending or under contract fell to 1,793, the lowest level since February 16. At the same time, active inventory increased slightly to 5,045 homes.

For buyers and sellers, however, the headline doesn't tell the entire story. Conditions vary considerably by price range.

What is happening in the Orange County housing market?

Three numbers stand out this week:

• 5,045 homes are actively listed for sale, up from 5,032 the prior week.

• 1,793 homes are pending or under contract, down from 1,837.

• 620 new listings entered the market during the past seven days, while 432 properties closed. 

The decline in pending sales is particularly noteworthy because this is the first time the number has fallen below 1,800 since February. 

Is the Orange County housing market slowing down?

Yes, transaction activity is showing signs of slowing, but the slowdown isn't uniform across every price range.

Pending sales are declining while available inventory has begun edging higher. Orange County's median time on market also increased from 45 to 46 days, while the average increased from 64 to 65 days.

That gives buyers more choices and, in some situations, more negotiating room than they had in a faster market.

It does not mean every Orange County home is suddenly difficult to sell.

How are mortgage rates affecting Orange County real estate?

Mortgage rates are an important part of the current slowdown. The September 21 report cited a 30-year fixed mortgage rate of approximately 7.19%.

Higher rates increase the monthly payment associated with the same purchase price. As a result, rate changes tend to have an especially noticeable effect on buyers who are financing a large percentage of their purchase.

The impact is beginning to show in Orange County's lower price ranges.

What is happening with Orange County homes under $1 million?

Homes priced below $1 million are showing some of the clearest signs of rate sensitivity.

This week:

• Median market time increased from 42 to 45 days.

• Active inventory increased from 1,899 to 1,904 homes.

• Buyers in this range tend to be particularly sensitive to changes in monthly mortgage payments.

For sellers in this price range, accurate pricing is becoming increasingly important.

Which Orange County price range is moving the fastest?

Interestingly, the $1 million to $2 million market remains the fastest-moving price segment in Orange County.

Median market time remained at 40 days, with 1,867 active listings in this range.

Current median market times by price range are:

This is a good example of why broad national housing headlines don't always describe Orange County accurately.

Are Orange County home prices falling?

The latest weekly closed-sale figures show some movement, but one week of closings shouldn't be interpreted as a new price trend.

The median closed price for Orange County single-family homes was $1.5 million, compared with $1.55 million the previous week. The median list price remained essentially unchanged at approximately $1.749 million. 

There is also an important timing issue: homes closing today generally went under contract weeks earlier. Closed-sale data therefore tends to lag current changes in mortgage rates and buyer activity.

Are Orange County sellers negotiating?

There is evidence of negotiation, particularly at higher price points.

For closed sales above $2.5 million, the average sale was approximately 3.4% below the asking price during the latest reporting period. For properties below $2.5 million, the average difference was approximately 1.5% below asking. 

That doesn't mean buyers should automatically expect a particular discount. Property condition, location, competition, original pricing and time on market all matter.

Is this a buyer's market in Orange County?

The current numbers don't support treating all of Orange County as one market.

Buyers are benefiting from:

• More inventory than earlier in the year

• Longer marketing times in some price ranges

• Fewer properties moving into escrow

• More opportunities to negotiate on homes that have been sitting

• Less urgency on some listings

At the same time, correctly priced homes in desirable neighborhoods can still attract significant buyer interest.

What does the market mean for Orange County home sellers?

Sellers should pay particular attention to price, condition and presentation.

In a slower market, buyers have more opportunity to compare one property against another. Homes that are overpriced at launch can accumulate market time and eventually require a price adjustment.

For sellers considering listing this fall, I would focus on three things:

• Price against today's competition, not against what a neighbor sold for several months ago.

• Prepare the property before it reaches the market. Condition becomes more important as inventory increases.

• Watch the first two weeks closely. Showing activity and buyer feedback can provide valuable information about whether the market is responding to the price.

What does the market mean for Orange County home buyers?

Higher mortgage rates are certainly a challenge, but a slower market can create opportunities that weren't available when buyers were competing aggressively for nearly every well-priced property.

Buyers may have more time to evaluate a home, conduct inspections and negotiate price or other terms.

The key is to evaluate the entire transaction—purchase price, interest rate, monthly payment, property condition and anticipated length of ownership—rather than focusing on any single number.

Is now a good time to buy or sell a home in Orange County?

There isn't one answer that applies to everyone.

For sellers, today's market makes realistic pricing and strong property preparation more important.

For buyers, reduced competition may create opportunities, but borrowing costs remain a significant consideration.

And for homeowners who don't need to move, waiting may be perfectly reasonable.

The decision should be based on your individual property, finances and objectives rather than a national headline.

Orange County Housing Market: Frequently Asked Questions

How many homes are currently for sale in Orange County?
The September 21 report counted approximately 5,045 active residential listings in Orange County.

How many Orange County homes are pending or under contract?
There were 1,793 pending or under-contract properties, down from 1,837 the previous week. 

How long does it take to sell a home in Orange County?
The countywide median was approximately 46 days on market, although it varied substantially by price range. 

What price range is selling fastest in Orange County?
According to the latest report, properties between $1 million and $2 million had the shortest median market time at approximately 40 days. 

Are higher mortgage rates affecting Orange County home sales?
Current data show declining pending activity alongside rates above 7%, with the sub-$1 million segment showing increasing market times. That is consistent with financing costs putting additional pressure on rate-sensitive buyers. 

The Bottom Line

Orange County real estate is slowing, not stopping.

The most important development this week is the decline to 1,793 pending and under-contract homes, combined with inventory rising to 5,045. Buyers have more choices, while sellers are competing for a smaller pool of active purchasers. 

But Orange County remains highly segmented. A $900,000 condo, a $1.5 million single-family home and a $3 million coastal property can behave like three very different markets.

If you're considering buying or selling, the most useful analysis is not simply "What is the Orange County market doing?" It's what is happening in your city, neighborhood and price range.

Christopher Phipps
Phipps & Associates | Realty ONE Group West
DRE #01504980