Los Angeles Housing Market Update: January 2026 Data and Outlook

Every month, our team analyzes the latest housing data for the Los Angeles metro area to give our clients an honest, numbers-first look at where the market stands. This January 2026 update covers pricing trends, inventory shifts, affordability, and what the forward-looking data suggests for buyers, sellers, and investors across West LA and the broader Westside.

What Is Happening with Home Prices in Los Angeles Right Now?

Home values in Los Angeles have turned slightly negative on a year-over-year basis, declining -0.6% as of the latest data. This marks a meaningful shift from the 4.2% annual growth we saw just twelve months ago. The current median existing home price sits at $955,000, just above the 2024 peak of $943,700.

For context, the long-term historical average for LA home value growth since 1982 is 5.3% per year. The current -0.6% reading tells us the market has entered a period of price normalization after years of above-trend appreciation. Forecasters currently project prices to remain slightly negative through the end of 2026 (around -1.4%) before recovering to positive territory in 2027 with an estimated 2.7% annual gain.

How Much Inventory Is Available in Los Angeles?

This is one of the most significant shifts in the current market. Existing home listings surged 17.6% year over year to 11,701 active listings as of December 2025. That is the highest listing count we have tracked in over a year, and it represents a dramatic loosening from the ultra-tight conditions that defined 2021 through 2023.

Months of supply, the key indicator of market balance, has climbed to 2.9 months. For reference, six months of supply is generally considered a balanced market. While 2.9 months still favors sellers, it is up significantly from the 2.2 months we recorded a year ago. Buyers in neighborhoods like Santa Monica, Brentwood, and Pacific Palisades are seeing more options than they have had in years.

How Affordable Is Housing in Los Angeles in 2026?

Affordability remains the biggest challenge facing the Los Angeles housing market. The current housing-cost-to-income ratio sits at 69.4%, meaning the median household would need to dedicate nearly 70% of gross income to housing an entry-level home. This earns Los Angeles a grade of F in affordability by industry standards.

The monthly payment for an entry-level home is approximately $5,796 at current mortgage rates of 6.2%. However, there is a silver lining: rates are forecast to ease to approximately 6.1% through 2026, and median household income has grown 3.7% year over year to $94,600. If rates decline and income growth continues, the affordability picture should gradually improve through 2027 and 2028.

Are Home Sales Increasing or Decreasing in Los Angeles?

Existing home sale closings are running at an annualized rate of 54,612, which represents a 3.1% increase year over year. While this is positive, the growth rate has been decelerating. Forecasts project sales volume growth to slow to approximately 0.4% by February 2026, suggesting the market is reaching a near-term plateau.

New home sales have been softer, declining about 11.6% year over year as builders navigate affordability challenges and weaker buyer demand at current price points. Builders have been relying heavily on incentives, including rate buydowns and closing cost credits, to support demand.

What Does the Tiered Market Look Like Across Price Segments?

The LA market is behaving very differently depending on price tier. The high tier (median $1,749,000) is appreciating at 7.1% year over year, far outpacing the middle tier ($900,000 at 1.7%) and the low tier ($575,000 at -0.9%). This divergence reflects a key reality: premium Westside neighborhoods in Brentwood, Pacific Palisades, and Beverly Hills are still seeing strong demand from high-income buyers, while entry-level segments face the brunt of the affordability squeeze.

What Is the Employment Outlook for Los Angeles?

Employment growth in the Los Angeles metro has slowed to 0.2% year over year, with approximately 11,300 jobs added. The unemployment rate stands at 6.0%. While the economy is not contracting, the days of robust 5%+ employment growth that fueled the 2021-2022 housing surge are firmly in the past. Employment is forecast to remain flat at 0.2% growth through 2028, which means housing demand will be driven more by migration patterns and demographics than by job creation.

What Should Buyers in West LA Do Right Now?

For buyers who have been waiting on the sidelines in Santa Monica, Venice, Westwood, or Mar Vista, the data suggests the current environment offers more leverage than at any point since 2019. Inventory is up, price growth has stalled, and sellers are more willing to negotiate. With prices forecast to rebound in 2027, buyers who act in the first half of 2026 may be purchasing near the bottom of this cycle.

That said, affordability remains a real constraint. Buyers should focus on neighborhoods where the price-to-value equation makes sense for their specific situation and should be strategic about locking in rates with an eye toward refinancing when conditions improve.

What Should Sellers in West LA Know?

Sellers need to recalibrate expectations. The days of listing high and receiving multiple offers within a week are behind us in most segments. With months of supply climbing and price growth flat to negative, proper pricing strategy is essential. Properties that are priced at or slightly below market are moving; those priced aspirationally are sitting.

The exception is the high-end tier. If you are selling a premium property in Brentwood, Beverly Hills, or Pacific Palisades above $1.5 million, demand remains relatively strong and that segment is still appreciating. For sellers in the sub-$1M range, staging, pricing precision, and pre-listing preparation have never been more important.

What About Real Estate Investors in Los Angeles?

The investment landscape is nuanced. Apartment effective rents fell -0.4% year over year to $2,623, slightly weaker than the national average. Apartment occupancy dipped to 95.7% from 95.9%. These are not alarming numbers, but they reflect a market that is no longer generating easy rental income growth.

For value-add investors, this normalization period creates opportunity. With more inventory available and sellers more willing to negotiate, the ability to acquire properties at reasonable basis points and improve them for rental or resale becomes more attractive. Multifamily permits have increased 3% year over year, signaling that developers see long-term fundamentals supporting the LA rental market.

The Bottom Line for January 2026

The Los Angeles housing market is in a transitional phase. Prices are flat, inventory is rising, and affordability remains challenging. But the data also shows a market that is normalizing rather than crashing. Employment is stable, the high-end segment is holding strong, and forecasts point to a recovery beginning in 2027.

At West LA Real Estate Group, we believe this is exactly the kind of market where informed buyers and strategic sellers gain an edge. If you want a detailed analysis of conditions in your specific neighborhood, whether that is Santa Monica, Brentwood, Venice, Westwood, Pacific Palisades, Beverly Hills, or anywhere on the Westside, reach out to our team at 310.505.5571 or visit westlarealestategroup.com.

West LA Real Estate Group is led by Robert Schmalz, Broker Owner (DRE #01813025), and Camille Carrigan. We are a premier advisory team specializing in residential and investment properties across West Los Angeles, combining institutional financial acumen with deep local expertise to help clients navigate complex market conditions.