URGENT UPDATE: Californians are showing significant reluctance to purchase both homes and new vehicles as 2025 sales projections reveal a concerning trend in consumer confidence. Recent reports from the California New Car Dealer Association and real estate tracker Attom highlight a state of economic uncertainty affecting major purchases.
New vehicle sales in California are expected to reach 1.79 million in 2025, marking only a 2% increase from 2024, following a previous 1% decline. This stagnation indicates that consumers remain hesitant in the face of rising costs and economic instability.
Homebuyers are not faring any better. If current trends continue, approximately 317,000 residences will be sold in California this year, representing a 2% decrease compared to 2024. This decline follows a previous 5% increase last year and underscores the ongoing challenges in the housing market.
The reluctance to make these significant investments stems from a combination of factors, including job market stagnation and rising inflation. Californians are feeling the pinch as costs escalate, with the average new car price surpassing $50,000 and mortgage rates hitting 6.8% for 30-year loans, up from 2.9% in 2020.
“Uncertainty tends to make consumers pull back,” said John Sackrison, executive director of the Orange County Auto Dealers Association.
The current economic landscape reflects a broader national trend. Vehicle sales across the United States are running at an annual rate of 16.3 million, down 3% from last year, while homebuying is lagging at 4 million annually, also down 2%. These statistics indicate a nationwide hesitance among consumers to commit to large purchases.
The combination of high prices, increasing interest rates, and economic anxiety is creating a perfect storm for Californians. With car loans averaging 7.9% at mid-year 2025, up from 4.5% in 2022, and a significant pullback in home sales — a staggering 42% below the peak in 2021 — the market outlook appears grim.
As California grapples with these economic challenges, experts predict that manufacturers will continue to offer various incentives to stimulate sales of slower-moving models. However, the current sentiment suggests that consumers will remain cautious until they perceive more stability in the economy.
Looking ahead, it is crucial for potential buyers and sellers to monitor economic indicators closely. With ongoing fluctuations in interest rates and inflation, decisions regarding large investments in California will likely remain on hold until there is a clearer path forward.
As these developments unfold, Californians are urged to stay informed about the market and consider the implications of their purchasing decisions in this uncertain economic climate.
