Sacramento Market Cools: Rates 7.5% & CA Housing Props | October 2026

Hello and welcome to our new readers!

Cool weather is finally here! But you know what else cooled down recently? The real estate market.

With 30-year mortgage rates climbing back over 7.5%, higher borrowing costs have put a noticeable damper on local housing activity. Look at this week's key takeaways:

• Closed Sales: Down 37% from last month.

• Pending Sales: Dropped 19%.

• Absorption Rate: Down sharply from over 40% last month to 26% today.

What does a 26% absorption rate mean?

It signals that we have transitioned into a neutral market—we are no longer in a clear seller’s market.

What Sellers & Buyers Need to Know Right Now

• For Sellers: Pricing strategy is key. As inventory builds due to fewer pending sales and closings, sellers must adjust price expectations to stay competitive with active buyers.

• For Buyers: Higher rates initially cause a temporary pause while buyers digest the math. But as inventory accumulates and prices adjust, buyers typically step back in. Now is the ideal time to re-run your monthly payment numbers and look for opportunities.

• The Big Picture: Market conditions shift quickly. A return to favorable conditions can happen under the right economic circumstances, but acting on current market reality is what matters today.

Upcoming November Midterm Ballot: Housing Propositions Breakdown

With midterms right around the corner, three major propositions on the California ballot directly impact housing and real estate. Here is a clear, unbiased look at each measure:

Proposition 1: $11.25B Housing & Veterans Bond

• What it does: Authorizes $11.25 billion in state bonds. $10 billion would fund affordable rental housing, supportive housing, and down-payment assistance programs. The remaining $1.25 billion funds veteran home mortgage and down-payment programs.

• Supporters: Backed by Gov. Gavin Newsom, the CA Democratic Party, the ACLU, and housing organizations like the California Apartment Association. Proponents say it is critical for expanding affordable housing access.

• Opponents: Opposed by some fiscal conservatives and state Republican legislators, who express concern over taking on additional state debt without addressing underlying construction costs.

Proposition 37: $25B Middle-Income Homebuyer Loan Program

• What it does: Creates a state-run program offering fixed-rate second mortgages (up to 17% of purchase price) for middle-class buyers purchasing new homes priced under ~$1.5 million. Buyers must contribute at least 3% down, meet income requirements, and occupy the home as primary residents.

• How it pays for itself: Funded through state-issued revenue bonds that are repaid directly by participating homebuyers—not general taxpayer funds.

• Supporters: Endorsed by the California Association of Realtors and the CA Chamber of Commerce. Proponents argue it closes the savings gap for middle-class families while driving new home construction.

Proposition 45: CEQA Fast-Tracking for Housing & Infrastructure

• What it does: Sets strict legal timelines under the California Environmental Quality Act (CEQA) for designated housing, transit, and clean energy projects—capping environmental reviews at 365 days and court challenge reviews at 270 days.

• The Division: This measure splits traditional coalitions:

  • In Favor: Affordable housing advocates, the CA Building Industry Association, the CA Chamber of Commerce, and local editorial boards like The Sacramento Bee. They argue CEQA reform prevents frivolous lawsuits from blocking needed home building.

  • In Opposition: Major environmental coalitions, state labor union councils, and the ACLU. Opponents argue accelerated timelines weaken environmental oversight and reduce public input.

Have questions about how these market changes or upcoming propositions affect your home buying or selling plans? Reach out anytime—I’m always here to help you navigate the Sacramento market.

Paul Peletta