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Home Sales Fall 5.9% in March as Mortgage Rates Remain High
Uncertainty over the economy is also weighing on prospective buyers.
By Tim Smart
Source: U.S. News
Jakub Porzycki|NurPhoto|Getty Images
An aerial view of houses in Jersey City, United States on July 13, 2024.
Key Takeaways:
Sales of existing homes fell 5.9% in March, as uncertainty over the economy, high prices and elevated mortgage rates dampened activity, the National Association of Realtors said on Thursday.
All regions saw a monthly drop while annual sales fell in the Midwest and Northeast, but rose in the West and were unchanged in the South. Total home sales – which includes completed transactions on single-family homes, condominiums, townhomes and co-ops – now at 4.02 million, is lower than it was in May 2020 as the economy was reeling from COVID-19.
However, the median price of a home sold did rise 2.7% from a year ago to $403,700 from $392,900. And increased from $398,400 in February. It was the 21st straight month of year over year price increases.
"Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” NAR Chief Economist Lawrence Yun sain in a press release. “Residential housing mobility, currently at historic lows, signals the troublesome possibility of less economic mobility for society."
The report follows another one from the Census Bureau on Wednesday that said new home sales rose 7.4% in March and are up 6% from a year ago. The increase was driven by more affordable homes with the median sales prices dipping down 1.9% to $403,600. That is 7.5% below the price in March of last year.
“A wide inventory availability – at 8 months supply – is helping newly constructed home sales to move forward,” Yun said of the new home sales report. “The homebuilders’ focus on smaller-sized homes is also attracting buyers. The median price of newly constructed homes was $403,600, well below the $435,000 price from three years ago when builders were constructing larger-sized homes.”
Robert Frick, corporate economist at Navy Federal Credit Union, said the March existing home sale numbers are only a sign of what may happen to the housing sector.
“March numbers are bad, but they’re likely to get worse,” Frick said. “In addition to the existing pressures of high prices and high mortgage rates, prices for home furnishing will likely rise soon due to tariffs, and rising anxiety among consumers over inflation and jobs may magnify the instinct to hunker down already being felt by many families.”
Nervousness about the economy and specifically President Donald Trump’s on and off tariffs is weighing on the economy. Although it has not shown up to any degree in recent reports, there is plenty of anecdotal evidence that consumers and businesses alike are rethinking their spending and investing plans.
On Wednesday, the Federal Reserve released its “beige book” summary of economic conditions around the country. While it noted that the economy was relatively unchanged as of mid-April, it did say that local reports from businesses show they are facing higher prices for their supplies in advance of what they expect will be higher tariffs on imported goods.
“Most districts noted that firms expected elevated input cost growth resulting from tariffs,” the report said. “Many firms have already received notices from suppliers that costs would be increasing.”
Trump has imposed and subsequently postponed many of his tariffs, leaving a battle with China as the most concerning for markets at the moment. However, Trump and Treasury Secretary Scott Bessent have suggested that negotiations between the two nations could produce an agreement that would see tariffs significantly below the 100%-plus level that Trump has mentioned.
But it is the uncertainty as much as the level of tariffs that is driving a lot of the sell-off in the market, as companies such as Walmart, Delta Air Lines and, on Thursday, consumer behemoth Procter & Gamble warn of a slowdown.
“It’s not illogical to see the consumer adopt the ‘wait and see’ attitude, and we saw traffic down at retailers,” Schulten said on the maker of Tide and Charmin’s earnings call. “We saw consumers basically looking for value, migrating into online, bigger box retail, into club [retailers].”
On Monday, the International Monetary Fund lowered its forecast for U.S. economic growth this year to 1.8% from 2.7% as recently as January. Many U.S. economists have done the same while also raising the odds of a recession this year to as high as 60%.
Source: https://www.usnews.com/news/economy/articles/2025-04-24/home-sales-fall-5-9-in-march-as-mortgage-rates-remain-high
