March Home Sales Plummet to Lowest Levels Since 2009: What It Means for Buyers and Sellers

Higher mortgage rates and worries about the economy are creating a downbeat start to the spring housing market. In March, sales of existing homes dropped by 5.9% from February, coming in at 4.02 million units. This marks the slowest sales pace for March since 2009, according to the National Association of Realtors.

Compared to March 2024, sales fell by 2.4%. All regions saw declines month-to-month, with the West experiencing the steepest drop of over 9%. Interestingly, the West was the only region to see a year-over-year increase in sales, driven by robust job growth in the Rocky Mountain states.

These numbers reflect deals likely negotiated in January and February, when the popular 30-year fixed mortgage rate exceeded 7%. It only dipped below that threshold starting February 20, as reported by Mortgage News Daily.

Lawrence Yun, NAR’s chief economist, explained that home buying remains weak due to high mortgage rates making affordability a real challenge. He noted, “Residential mobility is at historical lows, signaling a potential decline in economic mobility for society.”

Despite a rise in available listings—up nearly 20% from March 2024 to 1.33 million units—sales still lagged. This translates to about a four-month supply of homes, which is low compared to the six-month supply considered balanced for both buyers and sellers.

More inventory combined with slower sales is beginning to cool off home prices. The median price of a home in March was $403,700. While still an all-time high for that month, the price only increased by 2.7% from last year, the smallest gain since August.

Yun also pointed out an interesting contrast: while stock and bond markets fluctuate, household wealth in real estate is reaching new heights. The Federal Reserve estimates that real estate assets are valued at $52 trillion. Each percentage point increase in home prices adds over $500 billion to household balance sheets.

First-time buyers accounted for 32% of the market in March, unchanged from the previous year. Historically, they typically represent about 40%. Meanwhile, all-cash sales fell to 26%, down from 28% the previous year, but investor activity remained constant at 15%.

It seems the housing market is in a tough spot. Higher rates, rising prices, and overall uncertainty are keeping potential buyers on the sidelines. The coming months will be crucial as we watch how these trends evolve in response to ongoing economic conditions.

For additional insights on housing market trends, check out the complete report from the National Association of Realtors here.

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