Existing home sales experience biggest drop since 2022

Key Points

• Existing-home sales fell 5.9% in March to a seasonally adjusted annual rate of 4.02 million units, marking the steepest month-to-month drop since November 2022 and the slowest March pace since 2008’s aftermath.
• High borrowing costs, with the average 30-year fixed mortgage rate at 6.81%, and elevated home prices are deterring many buyers despite the spring selling season.
• Inventory rose 19.8% year-over-year to 1.33 million homes for sale or under contract, yet demand remains weak, prompting sellers to offer concessions in 44% of transactions.
• Affordability pressures and broader economic uncertainty may drive a third straight year of subdued housing activity into 2025.

As rising uncertainty and high borrowing costs deterred buyers during what is usually the busiest season for real estate, the U.S. housing market saw its biggest monthly decline in existing-home sales in over two years in March.

Existing home sales experience massive drop

The National Association of Realtors (NAR) reports that sales of previously owned homes decreased 5.9% from February to a seasonally adjusted annual rate of 4.02 million units. This is the slowest pace for March since the aftermath of the 2008 financial crisis and the steepest month-to-month decline since November 2022.

Since families want to move during the summer and sellers list their properties to satisfy demand, spring usually heralds a spike in housing activity. High mortgage rates and high home prices, however, have prevented many buyers from making a purchase this year. According to Freddie Mac, the average 30-year fixed mortgage rate was 6.81% last week, making homeownership unaffordable for many.

The supply of homes has increased, but demand hasn’t kept up. Inventory has increased as a result of the entry of numerous homeowners who had postponed selling in the expectation of declining interest rates. 1.33 million homes were for sale or under contract at the end of March, up 19.8% from March 2024 and 8.1% from February.

High costs are still a deterrent, though. In March, the median price of an existing home nationwide increased to $403,700, the highest amount ever recorded for that month and a 2.7% increase from the previous year.

Buyers hesitant to make moves

Those buyers who stay in the market are putting more effort into their negotiations. Sellers included concessions—such as interest rate buydowns or help with closing costs—in 44% of home purchases during the first quarter, according to Redfin. Zillow reports that sellers reduced prices on nearly one in four listings in March, marking the highest percentage for that month in at least six years.

All things considered, the weak sales indicate that the market is still being significantly impacted by affordability and economic anxiety. “Even with more homes available, buyers remain hesitant,” said Lawrence Yun, NAR’s chief economist. “A meaningful rebound is proving elusive.”

If current patterns continue, mortgage rates and broader financial uncertainty may drive a third straight year of subdued housing activity in 2025.

Featured Image Credit: Alexander Isreb; Pexels: Thank You!

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