Existing sales lethargic in March despite slowing price growth
The pace of sales lagged behind last year’s rate, with mortgage applications and demand signals declining as economic uncertainty continues to take a toll.
Key points:
- Existing home sales fell 5.9% from February to March and 2.4% year-over-year, according to NAR.
- The decline came even as mortgage rates were trending down, suggesting that buyers are hesitant to act amid concerns about the economy and personal finances.
- To entice wary buyers, sellers "may need to price lower than your initial instinct to sell quickly and avoid giving concessions," a Redfin economist said.
While buyers showed greater interest in lower-priced new homes last month, that enthusiasm did not carry over to the existing home market.
Existing home sales fell 5.9% between February and March to a seasonally adjusted annual rate of 4.02 million — a year-over-year dip of 2.4%, according to the National Association of Realtors. Pending sales also remained sluggish heading into April, a sign that existing home sales may continue to lag in the coming months.
Most of the homes that sold last month would have gone under contract in February or early March — a time when mortgage rates were steadily dropping — but those lower rates were "likely offset by rising concerns about the outlook for personal financial situations and job security reported in consumer surveys," Realtor.com Chief Economist Danielle Hale wrote in an April 24 analysis of the latest NAR data.
While year-over-year home price growth slowed to 2.7% in March, down from 4.8% in January, the median existing home price of $403,700 was still an all-time high for the month of March.
Mortgage rates stabilize, but investors are jumpy
Mortgage rates remain hard to predict amid bond market volatility. The 30-year fixed-rate averaged 6.81% this week, a slight decline from last week's average of 6.83%, according to Freddie Mac. Mortgage News Daily had the rate pegged at 6.92% on April 24, trending down from a few days earlier when it hovered just below 7%.
Daily rates have been bouncing around in response to market shifts and unpredictable policy statements — factors that could keep mortgage rates in the mid-6% range this summer even if the economy continues to weaken, according to Lisa Sturtevant, chief economist at Bright MLS.
"Bond yields have been moving sharply up and down in response to uncertainty about broad-based tariffs and potential global economic impacts," Sturtevant said. "Investors may be less sure that U.S. bonds are the 'safe haven' investment that they historically have been, which means bond yields could rise."
Inventory up nearly 20%, but buyer activity declines
Nationally, inventory at the end of March was up 8.1% from February and up 19.8% compared to March 2024. This equates to a four-month supply, NAR reported, versus just 3.2 months of unsold inventory a year ago.
More choices hasn't translated to more sales, however. Mortgage applications dropped 12.7% week-over-week, according to the Mortgage Bankers Association. Purchase applications were up 6% compared to a year ago but fell 7% from a week earlier.
Home touring appears to be slowing down as well, according to Redfin's weekly market report. This means both buyers and sellers need to be "more strategic than ever" about next steps, said Chen Zhao, Redfin's economic research lead.
"My advice to sellers is to price your home fairly for the shifting market; you may need to price lower than your initial instinct to sell quickly and avoid giving concessions," Zhao said. "On the flip side, buyers should negotiate on price and terms and shop around even more than usual for the best mortgage rates."