Home sales just posted their biggest monthly fall since 2022

Existing home sales declined in March due to higher mortgage rates, marking the largest drop since November 2022. Sales were down 5.9% from February and 2.4% compared to March 2024. Despite expectations for a busy spring market, more inventory failed to drive sales. The housing market continues to struggle, with high mortgage rates affecting buyer activity. Mortgage rates have risen in recent weeks, reaching an average of 6.81% for a 30-year fixed-rate mortgage. Home prices are still rising, albeit at a slower pace, with the median price for existing homes in March at $403,700. Economists predict a stagnant housing market due to the current rate environment. This trend may reflect reduced economic mobility and less trading up to higher-priced homes. On the other hand, new home sales are on the rise, with a 7.4% increase from February and a 6% increase from a year ago. The median price for new homes sold in March was slightly lower than existing homes, indicating a shift towards smaller, more affordable homes. Despite some regions experiencing limited new housing construction, the supply of new homes presents an opportunity for buyers priced out of the existing home market. However, overall market activity may be subdued this spring, as indicated by a decrease in mortgage applications in response to rising rates.