A couple of weeks ago, everyone was talking about mortgage rates hitting 7.40%. Well, they haven’t budged.
According to Freddie Mac, the 30-year fixed rate is still sitting at 7.40% as of mid-October. To put that in perspective, we were looking at 6.27% this time last year. The 15-year fixed is hovering around 6.71%. While things have leveled out for the moment, a flat rate at a three-year high doesn’t exactly feel like relief—it just feels like our new normal.
What 7.40% costs on the county’s median house
Let’s look at the math for a median-priced single-family home in Orange County, which the latest housing report puts at $1,440,000. If you put 20% down, you’re financing $1,152,000.
At today’s 7.40% rate, you’re looking at a principal and interest payment of about $7,976 a month. If you had bought that exact same house last October at 6.27%, your payment would have been $7,108. That’s a difference of over $800 a month, or roughly $10,000 a year, just in interest.
Here’s something else to consider: over the life of a 30-year loan at 7.40%, you’ll pay around $1.7 million in interest alone. If you opted for a 15-year loan at 6.71%, that interest drops to about $678,000. Yes, the monthly payment jumps to over $10,000—which is tough for a lot of buyers to swallow—but if you have a lot of equity from a previous home and are downsizing, it might be worth sitting down with your lender to run the numbers.
Inventory is up, demand fell for a third straight week
That report counts 5,020 active listings — back above 5,000, up from 4,987. However, pending sales fell for the third week in a row, down to 1,616.
The most noticeable shift is in closed sales. We only saw 357 homes close over the last week, which is a pretty sharp 24% drop from the 470 closings the week prior. Basically, we have roughly three homes sitting on the market for every buyer who is actually pulling the trigger.
Prices are holding steady
With volume dropping like that, you might expect prices to plummet, but they aren’t.
In fact, the gap between what sellers are asking and what buyers are paying actually narrowed last week. Homes over $2.5 million sold for just 2.2% under asking, and homes under $2.5 million sold for just 1.3% under asking.
Eric Engelbert, who writes the Orange County Housing Report, said it plainly: “Sold prices are not falling apart, and the market is not seizing up.” His read is that “the slowdown is about buyers being selective, not about the market losing its footing.” As of right now, I agree. The homes sitting are the ones priced optimistically and based on numbers from months ago… when interest rates weren’t this high.
Houses and condos are not the same market
The median list price for a single-family home slightly cooled off to $1,699,800. But condos and townhomes? They haven’t budged. The median list price is holding steady at $825,000, and they are closing right around $809,500. With 20% down, a condo mortgage runs about $4,484 a month in principal and interest—which is essentially the entry point for homeownership in Orange County right now.
Homes priced between $1M and $2M are still moving the fastest, going pending in a median of 39 days.
The coastal number, and the forecast gap
Coastal markets like Laguna Beach are playing by their own rules (as always). Zillow has the typical Laguna home at just over $3 million, up nearly 7% from last year. That’s what happens when you continue to have high demand and practically zero new supply.
Looking ahead, the California Association of Realtors just released their 2027 forecast. They’re predicting statewide sales will bump up 3.7% and prices will rise 1.4%. The catch? Their forecast assumes mortgage rates will drop to 6.6%. Right now, we’re at 7.40%, and we haven’t seen any sign of that relief yet. My thoughts? Plan your budget around today’s 7.40% rate. If rates eventually drop to 6.6%, you can refinance and celebrate. Then you can send me a thank-you note. 😉 However, I want to reiterate that you should take the conservative approach and not commit to the loan if you cannot bear the current rate. Ultimately no one holds a crystal ball and were all just making our best guess based on the data available.
What I’d do this week
If you’re selling. Your buyer pool shrank a third straight week, and the homes that did sell still landed within 1.3% of ask. This means your price and positioning is doing almost all the work. Don’t read 357 closings as “nobody is buying.” Read it as “the buyers are being picky with their choices”.
If you’re buying. With over 5,000 homes on the market, you have the best selection you’ve seen all year. But since sellers aren’t giving massive discounts, the window to “lowball” is pretty tight. Also, make sure you get a quote for homeowners insurance before you remove your contingencies—insurance rates just got more complicated last week.
The data only tells us what the market is doing in general. Whether it’s the right time for you to make a move depends entirely on your personal situation.
Thinking about selling? Start with my Orange County Seller’s Guide, or get a free, no-obligation home valuation so you’re pricing off a real number instead of a Zestimate.
Buying? My Orange County Buyer’s Guide walks the whole process, start to keys.
Either way, call me and let’s talk through your situation.
Jaleesa Peluso | Berkshire Hathaway HomeServices California Properties
Phone: (949) 395-0960 | Book a call: calendly.com/jaleesapeluso | JaleesaPeluso.com
DRE #01935097