March saw steepest monthly sales drop in over a year as buyers back away
The US resale housing market took a significant hit in March as elevated mortgage rates continued to erode affordability, pushing existing home sales down by 5.9% from the previous month.
The seasonally adjusted annual rate of 4.02 million units fell well short of the 4.2 million expected, marking the steepest monthly decline since November 2022, according to the National Association of Realtors (NAR).
“Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” said NAR chief economist Lawrence Yun. He added that housing mobility is currently "at historical lows," raising concerns about diminished economic mobility more broadly.
The average 30-year fixed mortgage rate hovered around 6.7% in mid-March, roughly in line with last year’s levels, but still high enough to dissuade both buyers and sellers. Many homeowners are opting to stay put after securing lower rates in previous years, further restricting inventory turnover.
Despite these headwinds, home prices continue to rise. The median price for an existing home climbed 2.7% year-over-year to $403,700, with all four major US regions reporting increases. Year-over-year, existing home sales were down 2.4%.
While inventory rose by 8.1% from February to the end of March, Yun cautioned that the volume of available units remains low by historical standards. This tight inventory, coupled with minimal mortgage delinquency rates, suggests that the market retains some foundational strength.
“With real estate asset valuation at $52 trillion, according to the Federal Reserve Flow of Funds, each percentage point gain in home prices adds more than $500 billion to the household balance sheet,” Yun said in the report.
Still, some economists warn of looming pressure. Oliver Allen, senior US economist at Pantheon Macroeconomics, noted that the housing market remains "frozen" by the spread between today’s near-7% mortgage rates and the average 4.3% rate on existing loans from late 2023.
“The tariff shock is unlikely to alter this dynamic dramatically and has so far worsened it at the margin,” Allen said, referencing new trade measures enacted by President Trump. He added that an economic slowdown triggered by these tariffs could further suppress housing demand and weigh on home price growth.
Read more: Thriving through the downturn: How brokers are finding opportunity in a slowing market
Navy Federal Credit Union economist Robert Frick echoed those concerns, noting that higher tariffs could push up the cost of home furnishings while growing consumer anxiety over inflation and employment may lead more households to hold back on major financial commitments.
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