The spring housing market is off to a sluggish start, largely impacted by elevated mortgage rates and broader economic concerns. Sales of previously owned homes dropped by 5.9% in March compared to February, totaling 4.02 million units on a seasonally adjusted annualized basis. This marks the slowest pace for March home sales since 2009. On a year-over-year basis, sales declined 2.4%, with decreases recorded across all U.S. regions. The West experienced the steepest monthly decline, falling over 9%, though it was the only region to post an annual increase due to robust activity in Rocky Mountain states benefiting from strong job growth.
These figures are based on closings, which reflect contracts likely signed during January and February—when 30-year fixed mortgage rates exceeded 7%. Rates did not dip consistently below that threshold until late February. Elevated borrowing costs continue to hamper affordability, keeping both buyers and sellers cautious. Housing mobility remains at historically low levels, raising concerns over broader economic mobility and consumer confidence.
Despite the slowdown in sales, inventory rose sharply. March ended with 1.33 million homes listed for sale, nearly 20% more than the same time last year. At the current sales pace, this represents a four-month supply—still short of the six-month benchmark considered a balanced market. Increased inventory and slower transactions are beginning to temper price growth. The median sale price in March was $403,700, an all-time high for the month but up just 2.7% from a year earlier. This marks the smallest annual increase since August and continues a trend of slowing price appreciation since December.
Even as price gains cool, household wealth tied to real estate remains substantial. Real estate valuations are estimated at $52 trillion, and even a 1% rise in home prices adds over $500 billion to household net worth.
First-time buyers accounted for 32% of purchases in March, unchanged from the previous year but still below the historic average of 40%. All-cash sales made up 26% of transactions, down from 28%, while investor purchases held steady at 15%.
The outlook remains cautious, with a reported increase in canceled contracts during March and mounting concerns over inflation, tariffs, and employment. These factors could intensify consumer hesitation in the months ahead, further slowing an already fragile housing recovery.
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