Mortgage markets experienced another week of turbulence, driven largely by political headlines and ongoing economic uncertainty. However, despite the noise, the week closed with mortgage rates edging slightly lower. The real story remains within the mixed signals coming from the housing data.
How is the Housing Market?
In March, existing-home sales fell by 6% from February, underperforming relative to forecasts. This marks the slowest pace of March sales since 2009, reflecting the ongoing challenges in the resale market. Limited inventory continues to put a damper on the buying experience, with national supply sitting at just 4.0 months—well below the 6-month benchmark that typically defines a balanced housing market.
Despite the slowdown, prices continue to climb. The median price of an existing home reached $403,700—up 3% year-over-year and the highest on record for the month of March. Interestingly, while inventory remains low, it has grown 20% compared to last year, suggesting that new listings are entering the market but are still insufficient to meet buyer demand.
New Home Sales Update
While the resale market cooled, new-home sales told a different story. March saw a 7% increase over February, beating expectations. This uptick highlights continued strength in the new construction market, bolstered by developers trying to meet the needs of frustrated buyers facing limited resale inventory.
The median price of a new home dipped to $403,600, an 8% drop from last year. That price relief may be part of what’s driving more buyers toward new builds. In fact, the supply of new homes is now at its highest level since 2007, giving buyers more options in this segment than in the existing-home market.
Construction Starts Fall Short
Despite stronger new-home sales, homebuilders pumped the brakes in March. Housing starts overall fell 11% from February, with single-family starts dropping 14%, reaching their lowest level since July 2024. Future construction also looks soft, with building permits for single-family homes slipping slightly month-over-month.
That said, builder sentiment improved unexpectedly, according to the National Association of Home Builders (NAHB). However, concerns over rising material costs and tariff uncertainty continue to weigh heavily on the outlook for future construction activity.
Mortgage Activity Slows
The Mortgage Bankers Association reported a sharp drop in refinance applications, which fell 20% from the prior week. Despite that decline, refis are still up 43% compared to one year ago, suggesting homeowners are still taking advantage of lower interest rates when they can.
Purchase applications also took a hit, falling 7% week-over-week, although they remained slightly higher than last year at this time. Rate volatility, combined with economic uncertainty, continues to weigh on borrowers and stall momentum in the mortgage space.
What’s Next?
Looking ahead, markets will be closely monitoring several key economic reports this coming week:
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Gross Domestic Product (GDP): The broadest measure of economic activity, to be released Wednesday.
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Core PCE Inflation: A closely watched inflation metric, also coming Wednesday.
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ISM Manufacturing Index: A gauge of manufacturing sector strength, due Thursday.
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Employment Report: The marquee data release of the week, scheduled for Friday, covering job growth, the unemployment rate, and wage trends.
Additionally, investors are keeping a close eye on tariff-related policy changes, which could further influence building costs and market confidence in the coming months.
New Home Sales Bring Hope Amidst Complexity
This March Housing Market Update paints a complex picture: strength in new home sales, weakness in resales and starts, and signs of buyer hesitation amid broader economic questions. As mortgage rates waver and political and economic uncertainties continue, both buyers and sellers will need to remain agile and informed in the weeks ahead.
Stay tuned for further updates as we track how these trends unfold into the busy spring and summer housing season.
