March Sees Nine-Month Low in US Home Sales Amid Rising Mortgage Rates

U.S. existing home sales reached a nine-month low in March, reflecting a significant downturn amid rising mortgage rates and economic uncertainties. Sales fell 3.6%, resulting in a seasonally adjusted annual rate of 3.980 million units, the lowest since June 2025.

Market Dynamics and Economic Influences

According to the National Association of Realtors (NAR), this decline occurred despite a recent improvement in housing affordability. Factors contributing to the downturn include the ongoing conflict in the Middle East, particularly the war with Iran, which has affected gasoline prices and overall consumer confidence.

Consumer sentiment has dropped sharply, influencing household purchasing power. Daniel Vielhaber, an economist at Nationwide, indicated that there are no immediate signs of recovery in home sales. He forecasts a slow sales environment, particularly in the first half of the year, with potential improvement later as mortgage rates begin to decrease.

Sales Figures and Inventory Trends

• Existing home sales decreased 3.6% in March.
• Seasonally adjusted annual rate: 3.980 million units.
• Median home price rose to $408,800, a 1.4% increase year-over-year.
• Existing home inventory increased 2.3% from last year to 1.36 million units.

The home sales decline was noted across all four U.S. regions, and the overall sales dipped by 1.0% compared to the previous year. The under $250,000 price range remains particularly weak due to a lack of starter homes, exacerbating affordability issues.

Mortgage Rates and Housing Affordability

The popular 30-year fixed mortgage rate saw an increase from 5.98% in late February to 6.46% in early April. This uptick is attributed to rising U.S. Treasury yields, which have escalated due to inflation fears linked to geopolitical tensions.

• 30-year fixed mortgage rate:
  • 5.98% (late February)
  • 6.46% (start of April)
  • 6.37% (latest average)

The NAR adjusted its sales growth forecast for 2026, lowering it from 14% to 4%. The housing affordability index saw a decline from 117.5 in February to 113.7 in March, indicating ongoing challenges in the market.

Inventory Insights and Buyer Behavior

While the inventory of existing homes has increased slightly, it remains below pre-pandemic levels. Notably, condominiums and cooperative units experienced a 29.9% inventory plunge from a year ago, while single-family homes saw a 7.8% increase.

• Current inventory summary:
  • Total existing homes: 1.36 million units
  • Condominium inventory: down 29.9%
  • Single-family inventory: up 7.8%

As of March, first-time buyers represented 32% of home sales, which is crucial for a robust housing market. All-cash sales accounted for 27% of transactions, up from 26% last year. Distressed sales fell to 2% of transactions, a decrease from 3%.

Outlook for the Housing Market

Economists and industry leaders express cautious optimism about a potential rebound in home sales later in the year. Kamini Lane, CEO of Coldwell Banker Realty, noted that prior to recent market shifts, there was considerable momentum in the housing sector. The easing of mortgage rates and improved affordability were expected to reignite buyer interest.

As the market adapts to the current economic environment, stakeholders will closely monitor upcoming trends that may influence home sales moving forward.