Sales of previously owned residential properties recorded a noticeable decline during March, with figures showing a 5.9% drop when compared to February. Data indicate that transactions fell to 4.02 million units on a seasonally adjusted annualized basis. This performance marks the slowest pace for the month since 2009 and reflects a 2.4% decrease from the corresponding month a year ago. All regions showed lower sales numbers, with the West experiencing the steepest decline, down more than 9% in volume. Interestingly, the Western region maintained a year-over-year increase, influenced by strong hiring trends in several Rocky Mountain states.
The reported data are based on completed closings, capturing deals likely initiated during January and February when the rate on the standard 30-year fixed mortgage exceeded 7%. It was not until February 20 that mortgage rates dipped slightly below the 7% threshold. A prominent economist from the association noted that challenges in affordability, driven by high mortgage interest, have reduced the number of buyers entering the market. This slowdown in residential transactions may affect consumer mobility, a factor that holds broader implications for the economy.
In tandem with the decline in sales, available inventory rose significantly. By the end of March, the number of listings reached 1.33 million units, an increase of nearly 20% compared to March of the previous year. Current sales figures equate to roughly a four-month supply, falling short of the six-month benchmark that typically defines a balanced market. This increased supply, coupled with a softer sales environment, has begun to temper the upward momentum in home prices.
Price indicators show that while the median sale price for existing homes reached an all-time high for March at $403,700, the annual price growth remained modest at 2.7% compared to last March. The rate of annual gains in prices has gradually decreased since December, registering its smallest increase in August. Despite the slowed pace in price appreciation, rising values continue to contribute significantly to household wealth. Federal estimates place the total value of residential real estate at $52 trillion; thus, each additional percentage point in home prices adds in excess of $500 billion to the collective balance sheets of households.
The share of first-time buyers in the market has held steady at 32% during March, which is consistent with the previous year’s figures, even though this segment has historically represented about 40% of transactions. The proportion of all-cash sales slipped modestly from 28% to 26%, while investor participation remained constant at around 15% of total transactions.
Recent figures also revealed a rise in the number of canceled purchase agreements in March. With market fluctuations being observed in April, there is a chance that these cancellations could become more frequent. A leading corporate economist from a well-known credit union warned that the current trends set the stage for continued softening in the housing market as transactions progress in the coming months.
A specialist from a major lending institution further explained that March’s results point to a market that could experience additional slowdown. He pointed to the combination of elevated home prices and high mortgage rates, along with expected rises in furnishing costs amid tariff measures. Such economic uncertainty regarding inflation and employment might lead many families to postpone their buying plans.
