The resale housing market stalled in March during a critical selling season as elevated mortgage rates sidelined buyers, deepening affordability challenges.
Existing home sales declined 5.9% in March to a seasonally adjusted annual rate of 4.02 million, according to the National Association of Realtors. This marked the steepest monthly decrease since November 2022. Economists polled by Bloomberg had expected sales to reach 4.15 million.
Sales slowed from last year, dropping 2.4% from 4.12 million sales in March 2024.
“Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” NAR chief economist Lawrence Yun said in a press release. “Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society.”
House hunters remain on the fence about buying a home as mortgage rates march toward 7%. Separate data showed applications to purchase a home fell for a second week to the lowest level since February, according to data from the Mortgage Bankers Association.
This cautious sentiment comes amid an increase in housing inventory. At the end of March, total housing inventory reached 1.33 million units, marking an 8.1% increase from February and a 19.8% rise from a year ago. Unsold housing inventory now represents a four-month supply at the current sales pace, an increase from a supply of 3.5 months in February and 3.2 months in March 2024.
Read more: Why are home prices so high?
Adding to the affordability challenges, the median existing-home price in March hit $403,700, up 2.7% from the previous year. Price increases were seen across all regions, making it even more difficult for homebuyers to navigate an already tough market with rising mortgage rates.
“In a stark contrast to the stock and bond markets, household wealth in residential real estate continues to reach new heights,” Yun said.
“With mortgage delinquencies at near-historical lows, the housing market is on solid footing. A small deceleration in home price gains, which was slightly below wage-growth increases in March, would be a welcome improvement for affordability.”
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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