The housing market experienced a significant downturn in March, with home sales plummeting by 5.9% compared to the previous month, marking the largest month-to-month decrease since November 2022.
Additionally, existing home sales were down 2.4% compared to the previous year, indicating a challenging path ahead for the housing market amidst tariff and recession fears.
The big picture: Despite the decline in sales, home prices continue to rise, reaching a national median sales price of $403,700 in March, a 2.7% increase from the previous year and an all-time high for the month of March.
- The housing market has been in a prolonged freeze, with affordability issues keeping potential buyers out of the market, and record list prices further exacerbating the problem.
- Mortgage rates, which have been hovering around 7% for the past year, have not shown significant movement despite recent volatility in the bond markets, with rates on 10-year Treasury bonds remaining elevated.
- Housing starts for single-family homes declined by 14.2% in March, following tariff announcements and elevated rates, leading to financial challenges for builders and buyers. Cost increases are making it difficult to offer homes at accessible price points for entry-level buyers, resulting in softened demand.
- However, there has been a steady increase in the existing housing market, and inventory of existing homes jumped 8.1% in March from February, leading to a more balanced market situation, although the trend reversed in March with properties sitting on the market for an average of 36 days, compared to 42 days in February.
