Is economic uncertainty beginning to impact the housing market?
Existing-home sales in March clocked in at a seasonally adjusted annual rate of 4.02 million, 2.4% lower than one year ago and a 5.9% drop compared to February, according to the newest report from the National Association of Realtors (NAR).
Sales are falling despite rapidly growing inventory, which is 19.8% higher than last year. The four months of supply, the highest level since September 2024, reflects this. The drop in sales and gain in supply didn’t greatly affect the median price, which rose 2.7% year over year to $403,700.
Sales in a single month tend to be initiated in the preceding months, so some percentage of March sales may not have been affected by the market turmoil that occurred in April. But existing-home sales figures may be an early sign that homebuyers are reluctant to make big purchases with a cloudy macroeconomic outlook.
“Uncertainty and anxiety are going to cloud the spring housing market this year,” Bright MLS chief economist Lisa Sturtevant said in a statement. “Lower mortgage rates and more inventory were expected to bring more home shoppers out this spring.
“But while some buyers will take advantage of more listings and more room for negotiation, others will hold back, unwilling to make a big decision in these current uneasy times.”
The overall drop in sales is largely driven by a 4.2% year-over-year pullback in the South, which makes up the highest share of existing-home sales among the four regions. But the declines were present in all four regions, led by the West, which fell 9.4% compared to February.
The drop in existing-home sales counters the positive numbers in new-home sales announced this week. New homes sold at an annual rate of 724,000 in March, a 6% rise compared to the same month in 2024. That trends was also largely driven by the South, which posted a 22.3% annual jump.
Anticipation for April sales reports will be high as they will be the first to account for President Donald Trump’s global tariffs announcement on April 2. While he paused the tariffs just hours after they took effect, the scope and scale of them have caused stock market indexes, the bond market and the dollar to drop significantly over the course of the month.
How this impacts the housing market remains to be seen, but more up-to-date data suggests there will be one.
Consumer confidence reports show sharp drops for April and homebuilder sentiment has also declined. The March report on new construction disclosed a 9.7% annual decline in single-family starts and permits dropped too.
Weekly mortgage applications fell by 12.7% as mortgage rates have been pushed back up near 7% as a result of the bond market sell-off.
In some U.S. cities, inventory is rising considerably without buyers coming into the market. Sellers may be listing in the hope of getting out ahead of any macroeconomic decline, while buyers could be waiting to see how things unfold.
The existing-home sales report certainly supports that theory, with inventory rising dramatically and sales falling by considerable margins.
With markets remaining volatile, Trump has walked back some of the rhetoric that has spooked investors, primarily the current 145% tariff on China and threats to oust Federal Reserve Chair Jerome Powell.
But the famously mercurial president could change course on any given day, and the uncertainty alone has the potential to impact housing markets.
“Buyers and sellers are both understandably cautious given economic uncertainty,” Compass President Neda Navab said in a statement. “The daily zig zag of news headlines, stock market charts, and economic reports are leading to more drawn-out decision-making.
“While determined buyers are still navigating the market, especially when homes are priced accurately, others are taking a wait-and-see approach.”
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