For much of the past few years, the Los Angeles housing market has felt frozen. Inventory has been tight, mortgage rates high, and transaction volume stuck near historic lows. But beneath the surface, the data tells a more optimistic story. Rather than disappearing, many buyers and sellers appear to be waiting and 2026 may be the year that activity finally breaks loose.
The Market Isn’t Dead It’s Delayed
One of the clearest signals of hidden demand comes from listing withdrawals. In 2025, nearly half of newly listed homes in LA were pulled off the market without selling. At first glance, this looks concerning. Some have called it “shadow inventory,” assuming these homes will flood the market later and pressure prices.
But a closer look reveals something different. Most withdrawals are not investors exiting the market. They are owner-occupants families who need to sell their current home in order to buy their next one. When these sellers pause, they don’t just delay one transaction; they delay two: a sale and a purchase.
That means many 2025 transactions weren’t canceled they were postponed into 2026.
Mortgage Applications Tell the Same Story
Mortgage data reinforces this idea. Throughout 2025, purchase mortgage applications ran 15–25% higher year over year, while actual closed sales rose only slightly. Applying for a mortgage is not casual behavior. These are serious buyers who gathered documents, ran numbers, and planned to move but didn’t complete the transaction.
Why?
- Rates may have ticked up at the wrong time
- The right home never appeared
- Monthly payments stayed just out of reach
What matters is that these buyers didn’t disappear. They paused.
What Could Unlock the Market
Mortgage rates are a key factor, but they aren’t the only one. Historically, buyer activity picks up when rates approach 6%. Even brief dips toward that level have sparked noticeable increases in showings and offers.
Equally important is job mobility. Hiring has slowed as workers “job hug,” choosing security over change. When people don’t change jobs, they usually don’t change homes. If hiring improves in 2026 even alongside slightly higher unemployment as more people re-enter the workforce confidence could return quickly.
That combination of moderating rates + improved job confidence is what could finally unlock the logjam.
A Stronger Upside Than Forecasts Suggest
Most economists are calling for about 5% growth in home sales in 2026. But the data on delayed demand suggests something stronger is possible. If conditions cooperate, 8–10% sales growth is not unrealistic potentially the strongest post-pandemic rebound in transactions.
The LA housing market isn’t frozen because demand vanished. It’s frozen because demand is waiting. And waiting demand can move quickly once conditions change.
