Sales of previously owned homes in the United States fell in March as home prices continued to rise while mortgage rates remained steady. This decline in sales, down 4.3% from the previous month, reflects the ongoing issue of affordability in America’s housing market. Despite some regions seeing an increase in sales, overall, the market is struggling as prices reach new highs.
The median price of an existing home in March was $393,500, a 4.8% increase from the previous year, marking the highest March price on record. Rising home prices, combined with stagnant mortgage rates, are creating challenges for potential homebuyers. Despite an initial uptick in sales at the beginning of the year, momentum has now stalled as the Federal Reserve signals no plans to cut interest rates anytime soon.
NAR chief economist Lawrence Yun notes that the housing market remains stuck as interest rates have remained relatively stable. While there are more job opportunities available, home sales are not seeing significant growth. Mortgage rates play a crucial role in housing affordability, and the uncertainty surrounding rate cuts is adding to the frustration for potential buyers.
Last year, home sales hit a historic low due to soaring mortgage rates, but as rates began to decline, hopes for further rate cuts were dashed. Mortgage rates have held steady in recent weeks but are expected to rise due to climbing bond yields. Additionally, home prices have not seen any significant decreases, further complicating the affordability issue for many buyers.
Despite the challenges, there is a glimmer of hope in the increase of first-time homebuyers entering the market. Representing 32% of all transactions in March, this group is showing a willingness to navigate the current housing market conditions. The recent NAR settlement, which could impact how real estate agents are compensated, may be influencing some buyers to act before new rules take effect in July.
While the housing market continues to face obstacles, particularly in terms of affordability, there are signs of resilience among buyers. The impact of rising prices and stagnant mortgage rates is being felt across the country, with sales struggling to gain momentum. As the industry awaits the outcome of the NAR settlement and potential changes to real estate practices, buyers are navigating the current market conditions with caution and strategic planning.
