Home sales tumbled to a fresh low as the housing market stays stuck in neutral.
Sales of previously owned homes ran at a 3.98 million pace in March, the National Association of Realtors said April 13. That means that if sales continued at this rate for the full year, 3.98 million homes would be sold — the lowest since 1995.
What’s more, NAR revised its forecast for the year down sharply. In December, the group had predicted a 14% increase over 2025, when Americans sold just over 4 million homes. The group now projects a 4% increase.
“Lower consumer confidence and softer job growth continue to hold back buyers,” NAR Chief Economist Lawrence Yun said in a statement.
Low inventory and high prices are also to blame, he said, but added, “mortgage rates have been rising, and that has led us to trim our home sales outlook for the year.”
Rates for home loans pushed below 6% in late February for the first time since 2022, only to be sideswiped by the Iran war. Inflation from the war, due mostly to higher energy prices and supply chain snarls, have nudged rates higher once again.
In response, mortgage applications have fallen for four straight weeks.
Consumer confidence plunges
Many Americans are in no mood to house hunt, no matter what the cost of borrowing.
The most recent reading of a trusted measurement of consumer sentiment, out April 10, plunged to the lowest level ever recorded.
Respondents “across age, income, and political party all posted setbacks in sentiment, as did every component of the index, reflecting the widespread nature of this month’s fall,” said Joanne Hsu, the director of the University of Michigan survey.
“Assessments of personal finances declined about 11%, with consumers expressing a substantial increase in concerns over high prices and weaker asset values,” she added.
Still, NAR’s reading captures closings that happened during March, which means the headwinds from the Iran war haven’t yet shown up in that data.
All real estate is local
In some pockets of the country, demand remains as strong as it’s ever been. In the Greater Boston area, the draw of a strong tech sector and excellent school systems have made prices go “straight up” for over a decade, said Rich Rosa, a broker and owner of Buyers Brokers Only.
Rosa’s biggest problem is finding enough supply to meet all the demand. He sees multiple offers even in suburbs as much as 45 minutes away from the city. But even in such a hot market, there are some potential pitfalls.
A sustained surge in mortgage rates, like the one in 2022, is likely to give buyers pause, he said.
“The momentum of the spring market remains fragile,” said Lisa Sturtevant, chief economist for Bright MLS, in a note put out after the NAR data was released. “A resolution to the (Iran) conflict will help support a rebound in the housing market. However, if uncertainty, higher prices and mortgage rates persist, this could be a very slow spring.”
As Rosa put it in an interview with USA Today, “None of us knows what effect $4 gas will have if it continues for a few months.”
Story by Andrea Riquier, USA Today via Reuters Connect
