March home sales slowed in a lethargic opening to the spring buying
season
[April 25, 2025] By
ALEX VEIGA
Sales of previously occupied U.S. homes slowed in March, a lackluster
start to the spring homebuying season as elevated mortgage rates and
rising prices discouraged home shoppers.
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 Thursday. The March sales decline is the largest monthly
drop since November 2022, when sales fell 6.7% from the previous month,
and marks the slowest sales pace for the month of March going back to
2009.
Sales also fell 2.4% compared with March last year. The latest home
sales fell short of the 4.12 million pace economists were expecting,
according to FactSet.
The average cost of a U.S. 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.
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 U.S. housing market has been in a sales slump since 2022, when
mortgage rates began to climb from pandemic-era lows. Sales of
previously occupied U.S. homes fell last year to their lowest level in
nearly 30 years.
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. The average rate eased this
week to 6.81%.
Homes purchased last month likely went under contract in February and
early March, when the average rate on a 30-year mortgage ranged from
6.89% to 6.63%, according to Freddie Mac.
While sales of existing home fell last month, sales of newly built homes
surged in March. They jumped 7.4% from February and 6% from March last
year, the Commerce Department reported Wednesday.
To drum up sales, homebuilders have ramped up sales incentives, such as
paying to lower the initial rate on a homebuyer's mortgage. Many
builders have also shifted to their focus to smaller, less expensive
homes. That helped lower the median sale price on a newly built home
last month to $403,600.
In contrast, existing home sales tend to be driven by properties on the
upper-end of the market, where more affluent homebuyers can afford to
finance a home at current mortgage rates or perhaps pay cash. Consider,
sales of homes priced at $1 million or higher jumped 14% last month from
a year earlier, while those priced between $100,000 and $250,000 fell
4%, NAR said. The trend helps push up the median sales price for
existing homes.

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A sign announcing a home for sale is posted outside a home,
Thursday, Feb. 1, 2024, in Aceworth, Ga., near Atlanta. (AP
Photo/Mike Stewart, File)
 “Usually, the median home price for
newly constructed homes would carry about a 15%-20% premium over
existing homes,” Yun noted.
Sales fell in March even as 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, and a 19.8% jump from March last year,
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.
One reason the inventory of homes for sale has been rising is that
properties are taking longer to sell. Homes typically remained on
the market for 36 days last month before selling, up from 33 days in
March last year, NAR said.
More homes for sale and lower asking prices in many metro areas from
Miami to San Diego, translate to a more buyer-friendly market for
home shoppers who can afford to buy.
Sellers gave buyers money toward repairs, closing costs and other
concessions in 44.4% of U.S. home sales that occurred in the first
quarter, according to data from Redfin. That was up from 39.3% a
year earlier.
Many sellers are also lowering asking prices. More than 23% of home
listings on Zillow had their price lowered in March, the highest
share for any March since at least 2018.

Despite these buyer-friendly trends, the housing market remains
largely out of reach for many Americans, especially first-time
buyers who don’t have home equity gains to put toward a new home.
While home price growth has been slowing, the decline is negligible
against the nearly 50% gain in prices over the last five years.
“Uncertainty and anxiety are going to cloud the spring housing
market this year,” said Lisa Sturtevant, chief economist at Bright
MLS. “Lower mortgage rates and more inventory were expected to bring
more home shoppers out this spring, but while some buyers will take
advantage of more listings and more room for negotiation, others
will hold back, unwilling to make a big decision in these current
uneasy times.”
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