California Home Prices Dropped 0.44% in March – the Biggest Monthly Decline in Two Years.

California home values are now falling month-over-month, and the trend is becoming harder to ignore. According to Zillow data, home prices in the state dropped 0.44% in March 2024, which is the biggest monthly decline since July 2022, when prices fell by 0.61%. This marks a sharp reversal from just a few months earlier in December 2023, when home values were still rising by 0.51%. Over the past year, monthly growth has steadily weakened, moving from positive territory into a clear decline.

California’s home prices dropped 0.44% in March 2025. Access the above graph here. [Link]

Moreover, this 0.44% drop was the second-largest among all U.S. states in March, indicating that California is increasingly exposed to national housing pressures. High mortgage rates, buyer fatigue, and affordability challenges are likely driving the downturn. While past corrections, like the 2.44% plunge in 2008, were deeper, the current decline suggests that market sentiment is cooling quickly once again.

California Metros See Widespread Price Drops – San Jose Down 0.73%

Seasonally-adjusted home values in California fell to -0.44% in March 2025, marking the sharpest monthly decline in nearly three years. This drop wasn’t limited to just one metro; instead, it was felt across the state. The most significant decline came in San Jose, where home values dropped by -0.73%. Although San Jose still shows a strong year-over-year growth of 7.2%, the recent monthly fall signals weakening momentum. Price cuts were also widespread, with 14.9% of homes for sale in San Jose seeing reductions, indicating a softening of buyer demand.

San Jose saw the steepest monthly decline (-0.73%) in California despite leading in YoY growth (7.2%). Access the above table here. [Link]

Moreover, metros like Bakersfield (-0.55%) and Los Angeles (-0.50%) also experienced notable drops, despite both cities having large populations and ongoing real estate activity. This trend reflects a broader cooling caused by higher inventory levels and reduced competition among buyers. Santa Maria and San Luis Obispo also posted moderate monthly declines, each accompanied by price cuts on nearly 20% or more of listings. If conditions persist, more California metros may follow suit in the coming months.

Rising Inventory and Price Cuts Are Behind California’s Falling Home Prices in 2025

California’s housing market is beginning to slide, and the numbers explain why. The state is seeing a surge in homes for sale, with sales inventory growing by 49.5% year-over-year in March 2025, up from 10.9% the year before. More homes are now sitting on the market, and with buyer demand still historically low, this added supply is pushing prices downward. 

California’s sales inventory growth YoY reached 49.5% in 2025. Access the above graph here. [Link]

Moreover, sellers are growing more desperate. In March, 21.3% of homes for sale had a price cut, with over 18,000 homes seeing markdowns, which is the highest share since 2019. This jump in price reductions is a clear sign that sellers are struggling to attract buyers. Homes are also spending more days on the market (DOM), giving buyers the edge over sellers and highlighting that demand isn’t keeping up with supply. However, while falling prices offer some relief, California remains deep in a housing affordability crisis. 

Home values are still too high for most households, especially in high-cost metros. The recent price declines are a step in the right direction. Still, it will likely take many more months or even years before buying a home in California feels financially realistic for the average resident. If you need ZIP code-level information on California’s housing situation, sign up for Reventure Apps’ premium plan for just $39/ month. Get exclusive access to various market metrics across any state, metro, county, or ZIP code in the U.S.

FAQs about California Home Prices Dropped 

1. Why Are California Home Prices Falling in 2025?

California home prices are dropping due to a sharp rise in inventory (49.5% YoY), more frequent price cuts (21.3%), and historically low buyer demand. These conditions are putting downward pressure on prices across the state.

2. Which California City Saw the Biggest Home Price Drop in March 2025?

San Jose recorded the steepest monthly price decline in March 2025, with home values falling by 0.73%. Despite strong annual growth, this suggests that market momentum in the Bay Area is now slowing rapidly.

3. Will Home Prices in California Continue to Fall?

If inventory levels keep rising and affordability stays low, home prices in California are likely to keep falling in the short term. However, long-term trends will depend on mortgage rates, employment conditions, and housing policy.

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