California's housing market in 2026 shows modest sales declines but slight price growth, with median home prices around $889,190. Low inventory and higher mortgage rates limit sales, while the "lock-in effect" keeps homeowners from selling. Regional variations exist, with some areas seeing price stability or gains. Forecasts predict a gentle market recovery with sales rising 2% and prices increasing 3.6% to about $905,000, aided by lower interest rates and improved affordability. Challenges include inflation, insurance issues, and economic uncertainties.