U.S. existing home sales fell more than expected in March, weighed down by higher borrowing costs, and further weakness is likely as growing concerns of an economic slowdown because of tariffs sap demand.
Home sales dropped 5.9% last month to a seasonally adjusted annual rate of 4.02 million units, the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales declining to a rate of 4.13 million units.
Sales fell 2.4% year-on-year in March.
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Existing home sales are counted at the closing of a contract. Last month’s sales likely reflected contracts signed in January and February when the average rate on the popular 30-year fixed mortgage hovered close to 7%. The rate subsequently eased in March before rising to a two-month high last week.
A dimming economic outlook because of uncertainty caused by President Donald Trump’s constantly shifting tariff policy and duties already imposed on a plethora of imports, including lumber, is seen dragging the housing market.
Government data on Wednesday showed new home sales surged to a six-month high in March, with the median price declining as builders offered incentives to reduce inventory, currently at levels last seen in late 2007 at the height of the global financial crisis.
“Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,” said Lawrence Yun, the NAR’s chief economist.
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The inventory of existing homes jumped 8.1% to 1.33 million units in March. Supply shot up 19.8% from a year ago. The median existing home price increased 2.7% from a year earlier to $403,700 in March.
At March’s sales pace, it would take 4.0 months to exhaust the current inventory of existing homes, up from 3.2 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.
Properties typically stayed on the market for 36 days last month compared to 33 days a year ago.
First-time buyers accounted for 32% of sales, unchanged from a year ago. Economists and realtors say a 40% share is needed for a robust housing market. All-cash sales constituted 26% of transactions, down from 28% a year ago.
Distressed sales, including foreclosures, made up 3% of transactions, rising from 2% a year ago.
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