Orange County Real Estate Market Update – May 2025: Inventory Surges While Demand Sits Still

The Orange County housing market is entering a fascinating phase in 2025. While spring typically signals a rush of buyer activity and increased real estate transactions, this year is bucking the trend. According to the latest data, active inventory levels are climbing rapidly, but buyer demand is holding steady at historic lows.

Inventory Surge: A Shift After Years of Drought

As of May 2025, Orange County’s active listing inventory rose to 4,468 homes, marking the highest level since July 2020. That’s a 7% increase in just the last two weeks and a dramatic 45% jump compared to May 2024, when inventory sat at only 2,470 homes.

This rise isn’t just seasonal—it’s structural. After years of historically low housing turnover due to sub-3% mortgage rates and post-pandemic stagnation, more homeowners are finally listing their homes. In fact, there are 19% more new listings than last year, and 39% more than in 2023.

However, the surge in listings hasn’t been matched by buyer enthusiasm.

Demand Falls Flat Despite Lower Mortgage Rates

Despite slightly lower mortgage rates (hovering at 6.92%, down from 7.12% in 2024), buyer demand has remained frozen, with just 1,546 pending home sales in May. This marks the lowest May demand level since tracking began in 2004, and a staggering 79% below pre-COVID levels (2017–2019 average).

What’s behind this stagnation? Experts point to plunging consumer sentiment, driven by economic volatility and geopolitical concerns, such as trade tensions and inflation indicators. Even buyers who were pre-approved or actively searching have started to pull back or pause.

Market Time and What It Means for Sellers

The imbalance between rising supply and weak demand has pushed the Expected Market Time to 87 days, a stark contrast to 42 days just one year ago. In simpler terms, homes are now sitting on the market more than twice as long as they did in 2024.

Sellers in Orange County should take note: while it’s encouraging to see more listings, pricing accurately and presenting your home strategically is more important than ever in a slower-moving market.

What About the Luxury Market?

Luxury homes in Orange County—properties priced over $2.5 million—are experiencing their own set of dynamics. Inventory in this segment rose to 1,178 homes, while demand ticked up by 20%, reaching 150 pending sales. The Expected Market Time for luxury homes dropped from 228 to 196 days, signaling mild momentum in the high-end sector, likely due to improvements in financial market confidence.

However, don’t be fooled—homes over $6 million are still taking over a year to sell, with an average of 382 days on market.

What This Means for Buyers and Sellers in Orange County

Whether you’re buying or selling, the Orange County real estate market in 2025 presents both opportunities and challenges:

• Sellers: With inventory rising, competition is heating up. To stand out, focus on home staging, high-quality photography, and a strong online marketing presence. Pricing realistically is key.
• Buyers: With more homes on the market, you have negotiating power. However, be prepared for lingering volatility in mortgage rates and economic conditions.

Final Thoughts

The Orange County housing market is evolving. The days of bidding wars and rapid sales are giving way to a more balanced—though slower—environment. If you’re navigating this market, work with a knowledgeable real estate professional who understands current data, hyper-local trends, and how to position your home or offer effectively.

Looking to buy or sell in Orange County? Get in touch today for a personalized market analysis and expert guidance in today’s complex housing landscape.