US home sales fall in March, marking a slow start to the spring homebuying season

Sales of previously occupied U.S. homes fell in March to their slowest pace nine months, as easing mortgage rates failed to motivate home shoppers during what's traditionally been the busiest time of the year for the housing market.

Existing home sales fell 3.6% last month from February to a seasonally adjusted annual rate of 3.98 million units, the National Association of Realtors said Monday.

Sales also fell 1% compared with March last year, weighed down by declines in the Northeast and Midwest. The latest sales figure fell short of the roughly 4.06 million pace economists were expecting, according to FactSet.

"Lower consumer confidence and softer job growth continue to hold back buyers," Lawrence Yun, NAR's chief economist, said in a statement.

A measure of Americans' short-term expectations for their income, business conditions and the job market fell 1.7 points to 70.9, remaining well below 80, a marker that can signal a recession ahead. It's the 14th consecutive month that reading has come in under 80.

Sales have been hovering close to a 4-million annual pace now going back to 2023. That's well short of the 5.2-million annual pace that's historically been the norm.

Despite the pullback in sales, home prices continued to rise last month. The national median sales price increased 1.4% in March from a year earlier to $408,800, an all-time high for any March on data going back to 1999, NAR said. Home prices have risen on an annual basis for 33 months in a row.

The U.S. housing market has been in a slump dating back to 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied U.S. homes remained stuck last year at 30-year lows. They have remained sluggish so far this year, declining in January and February versus a year earlier.

The pace of home price growth has slowed or fallen in many metro areas and there are more homes on the market than a year ago, largely because they're taking longer to sell.

And until recently, mortgage rates were easing, lowering borrowing costs for homebuyers. Homes purchased last month likely went under contract in January and February, when the average rate on a 30-year mortgage ranged from 5.98% - its lowest level in three and a half years - to 6.16%, according to mortgage buyer Freddie Mac.

Mortgage rates started ticking higher in March as the war with Iran sent energy prices surging, heightening worries about higher inflation. That's pushed up the yield on U.S. 10-year Treasury bonds, which lenders use as a guide to pricing home loans. The average rate on a 30-year mortgage was at 6.37% last week, according to Freddie Mac. That's still down compared to a year ago.

Still, the rise in mortgage rates led Yun to lower his 2026 existing U.S. home sales forecast. He now projects sales will rise 4% this year, down from his previous forecast of a 14% increase.

The latest home sales snapshot and uncertainty over the trajectory of mortgage rates is clouding the outlook for the spring homebuying season.

A sharp run-up in home prices, especially in the early years of this decade, and a chronic shortage of homes nationally worsened by years of below-average home construction have kept many aspiring homeowners priced out of the market, especially first-time buyers who don't have equity from an existing home to put toward a new home purchase. Fewer first-time buyers bought homes in March than in February, NAR said.

Those who can afford to buy are benefiting from more properties on the market, although home inventory levels remain well below historical norms.

There were 1.36 million unsold homes at the end of March, up 3% from February and up 2.3% from March last year, NAR said. That's still well short of the roughly 2 million homes for sale that was typical before the COVID-19 pandemic.

March's month-end inventory translates to a 4.1-month supply at the current sales pace. Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.

A dearth of homes for sale in the Northeast is driving competition among buyers, with some homes drawing multiple offers - something relatively rare these days elsewhere in the country, Yun said.

That helped push the region's median home sales price nearly 6% higher in March from a year earlier, even as sales slowed to their slowest pace on record.

"We simply don't have enough supply in the marketplace," Yun said.