New real estate forecast as home prices drop in March
In this DML Report…
U.S. existing home sales dropped 5.9% in March 2025 to a seasonally adjusted annual rate of 4.02 million units, the lowest for March since 2009, according to the National Association of Realtors. Economists expected a decline to 4.13 million units, but high borrowing costs, with 30-year fixed mortgage rates near 7% in January and February when contracts were signed, deterred buyers. Sales were also down 2.4% from March 2024, reflecting growing economic uncertainty tied to President Trump’s shifting tariff policies and duties on imports like lumber, which are dragging on the housing market.
The inventory of existing homes rose 8.1% to 1.33 million units in March, a 19.8% increase from a year ago, but this failed to boost sales. The median home price climbed 2.7% year-over-year to $403,700, the highest March median on record, exacerbating affordability issues. At the current sales pace, it would take 4.0 months to clear inventory, up from 3.2 months a year ago, with a 4-to-7-month supply considered balanced. Properties stayed on the market for 36 days, compared to 33 days a year ago, signaling a slowdown in buyer activity.
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First-time buyers made up 32% of sales, unchanged from last year, though economists note a 40% share is needed for a healthy market. All-cash sales accounted for 26% of transactions, down from 28% a year ago, while distressed sales, including foreclosures, rose to 3% from 2%. The National Association of Realtors’ chief economist, Lawrence Yun, pointed to affordability challenges and high mortgage rates as key factors, with further weakness expected as tariffs and economic slowdown concerns continue to sap demand.