📆 11/7/2025 6:24 PM

Business & Economy News

California Economy, Vehicle Sales, Housing Market

• 📆 11/7/2025 6:24 PM

• 📰 ladailynews

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New vehicle and home sales in California are showing signs of weakness, reflecting broader economic anxieties and affordability concerns among consumers. Sales figures indicate a slowdown in both sectors, with rising interest rates and inflation contributing to the trend. The report details the challenges facing both the automotive and housing industries.

Californians are showing signs of economic caution, with both new vehicle sales and home purchases experiencing a slowdown. Analysis of sales data reveals a hesitancy among consumers to make large investments, reflecting broader economic anxieties and affordability challenges. The California New Car Dealer Association estimates a modest 2% increase in new vehicle sales for 2025, reaching 1.79 million, following a 1% decline in 2024.

This suggests a relatively flat market, despite a slight uptick in sales. Similarly, the housing market is facing headwinds. Based on current trends, approximately 317,000 residences are expected to be purchased in 2025, representing a 2% decrease following a 5% increase in 2024. These trends indicate that consumers are hesitant to commit to major expenditures, possibly due to concerns about economic stability and uncertainty. These patterns reflect a broader economic landscape where California’s consumers appear to be adopting a wait-and-see approach. \The sluggishness in both sectors can be attributed to a confluence of factors. Economic anxieties, fueled by changing policies and economic shifts, are playing a significant role. Hiring and wage growth have stagnated, diminishing consumer confidence. Inflation continues to erode household budgets, further squeezing disposable income and making it harder for consumers to meet their financial goals. Affordability is a major concern. The high prices of both new vehicles and homes, exacerbated by rising interest rates, are deterring potential buyers. The average price of a new car exceeding $50,000 and the presence of numerous high-priced zip codes in California compound the challenge. The Federal Reserve reports that the average rate on a five-year car loan reached 7.9% in mid-2025, up from 4.5% in 2022. Simultaneously, mortgage rates on a 30-year mortgage reached 6.8% in mid-2025, up from 2.9% in 2020. The combination of high prices and increased borrowing costs is putting significant pressure on consumers. Supply chain issues have been alleviated, factories are returning to normal operations, and car lots have been restocked. Yet, consumers are showing reluctance to buy at the current prices. Vehicle sales are down 12% compared to pre-pandemic boom years, while homebuyers are down 42% from their peak in 2021.\Looking back at previous economic downturns offers context to the current situation. Car sales in 2025 are still lagging behind the levels seen in 2016 and 2017 during the pre-pandemic economic boom. The impact of the coronavirus pandemic has resulted in ongoing challenges. Historically low mortgage rates and the pandemic-era push for larger living spaces drove the housing market to a peak in 2021. The end of those discounted loans has significantly reduced affordability, leading to a downturn in home sales. Nationally, the situation mirrors California’s trends. Vehicle sales nationwide are running at a 16.3 million annual pace, down 3% in a year, and house hunters are also showing signs of hesitation, purchasing at a pace of 4 million a year in 2025, down 2% in a year. The national homebuying pace is also significantly lower than the levels seen in previous years. These indicators reflect the complex economic challenges impacting both California and the broader United States. As manufacturers and dealers adjust to the changing landscape, they are implementing various incentives to boost sales. This suggests a proactive approach to address the slowdown and to reignite consumer interest in vehicles. The overall economic outlook for California depends on how these challenges are addressed and whether consumer confidence can be restored to encourage people to make significant purchases

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California Economy Vehicle Sales Housing Market Consumer Confidence Interest Rates

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