Business

Home sales slump at start of crucial spring buying season as high mortgage rates and rising prices deter buyers

By
Taylor Herzlich
Published April 24, 2025
Updated April 24, 2025, 4:20 p.m. ET

Home sales in March declined by the most since 2022 as stubbornly high mortgage rates and house prices kept buyers on the sidelines.

Sales of previously owned homes in March dropped 5.9% from the month before, to 4.02 million units, on a seasonally adjusted basis, plummeting in all regions across the country, the National Association of Realtors said Thursday.

It’s the largest monthly sales decline since November 2022, when sales fell 6.7% from the previous month.

Sales fell 2.4% compared with March last year, falling well short of the 4.12 million pace economists were expecting, according to FactSet. The pace of home sales in March hasn’t been that slow since the financial crisis in more than 15 years.

With mortgage rates hovering near 7%, the tepid sales were an inauspicious start to the vital spring homebuying season,

Existing home sales fell 5.9% last month from February to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said. The March sales decline is the largest monthly drop since November 2022 AP

The average cost of a US mortgage, which climbed to its highest level in two months last week, is a significant barrier for would-be homebuyers, said Lawrence Yun, NAR’s chief economist.

“Residential housing mobility, currently at historical lows, signals the troublesome possibility of less economic mobility for society,” Yun said.

As of Thursday, the 30-year fixed mortgage rate dropped to 6.81%, according to Freddie Mac.

Home prices increased on an annual basis for the 21st consecutive month, although at a slower rate. The national median sales price rose 2.7% in March from a year earlier to $403,700, an all-time high for March, but the smallest annual increase since August.

The US housing market has been in a sales slump since 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied US homes fell last year to their lowest level in nearly 30 years.

Home for sale
The national median sales price rose 2.7% in March from a year earlier to $403,700, an all-time high for March, but the smallest annual increase since August. Christopher Sadowski

Higher mortgage rates also dampened the start of the spring homebuying season in 2024. This year, after climbing to a just above 7% in mid-January, the average rate on a 30-year mortgage has remained mostly elevated, climbing last week to 6.83%, its highest level in eight weeks, according to mortgage buyer Freddie Mac.

Sales fell in March even as home shoppers more homes hit the market for the spring homebuying season.

There were 1.33 million unsold homes at the end of last month, an 8.1% increase from February, NAR said.

That translates to a 4-month supply at the current sales pace, up from a 3.2-month pace at the end of March last year. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

“I felt that more inventory would lead to more sales, but that’s not the case,” Yun said.

With Post wires