Existing home sales experienced an unexpected decline in April, as significant concerns over tariff-related uncertainties overshadowed the onset of the key spring housing season. The National Association of Realtors (NAR) disclosed on Thursday that existing home sales fell by 0.5%, reaching a seasonally adjusted annual rate of 4 million units. This figure marks the slowest pace for April since 2009 and reflects a 2% decrease compared to the same month in the previous year.
The announcement of reciprocal tariffs by President Donald Trump on April 2, applicable to imports from all countries, compounded existing economic anxieties and weighed heavily on consumer confidence. Shortly after the proclamation, the Trump administration did suspend many of the tariffs for a 90-day period, yet the initial shock rippled through the markets, exacerbating fears about a fragile economy.
Danielle Hale, the chief economist at Realtor.com, noted that the home sales recorded in April were likely situated within a context of already wavering consumer confidence. “These sales likely went under contract in March and early April, when mortgage rates remained relatively stable between 6.6% and 6.7%,” Hale explained. Even prior to the announcement on tariffs, consumers had expressed worries regarding their financial stability and job security, factors that may have led to hesitance in making significant purchases such as homes.
In recent weeks, the trend in mortgage rates has shifted upward, raising new concerns about affordability for potential buyers. Reports from Freddie Mac indicated that as of May 22, the average rate for a 30-year fixed mortgage stood at approximately 6.86%. This represents a minor increase from the previous week’s 6.81%, although it remains lower than last year’s 6.94%. Despite offering some relief to borrowers in comparison to the previous year, the current rates are still considered high relative to pre-pandemic levels.
While existing home sales showed weakness, there is a glimmer of optimism for prospective buyers concerning inventory. The number of existing homes listed for sale rose by 9% from March and by 20.8% compared to the same period last year, reaching 1.45 million units in April. This increase in inventory may mitigate price pressures in certain markets, stabilizing home prices and providing buyers with a broader selection of properties.
Lawrence Yun, Chief Economist at the NAR, characterized the current market as a “mild seller’s market” at the macro level. Yet, with inventory levels now the highest they have been in nearly five years, consumers find themselves in a more favorable position to negotiate for better purchasing conditions. He stated, “Sellers may face increased competition, which could lead to more favorable terms for buyers.”
In terms of pricing, the national median price for existing homes has continued its upward trajectory, increasing by 1.8% year-over-year to a record $414,000. This marks the 22nd consecutive month of year-over-year price increases. Regional disparities have emerged, with prices declining in the South and West but increasing in the Northeast and Midwest.
Hale reflected on the cautious optimism of home shoppers in this evolving landscape, noting that while a growing number of homes are available for sale, opportunities can vary significantly across different regions and price points. She cautioned that mortgage rates, a pivotal factor influencing affordability, are expected to remain within a range that may hamper, rather than enhance, home sales in the near term.
As market dynamics continue to shift, the interplay of consumer confidence, mortgage rates, and inventory levels will be instrumental in shaping the trajectory of home sales for the remainder of the year. Stakeholders across the housing sector are closely monitoring these developments, recognizing their potential implications not only for buyers and sellers but also for the broader economy, which remains intertwined with the performance of the housing market.
With the complex layers of market activity and economic indicators influencing real estate transactions, the ongoing evolution of the housing sector will require vigilant observation and responsive strategies from both industry professionals and potential homeowners navigating this intricate landscape.