U.S. existing home sales dropped to a nine-month low in March. Rising mortgage rates, limited inventory, and weak consumer confidence slowed activity across the housing market.
New data from the National Association of Realtors (NAR) showed sales fell 3.6% from the previous month. They reached a seasonally adjusted annual rate of 3.98 million units. That figure came in below economists’ expectations. It also marked the lowest level since June 2025.
The decline came despite some improvement in affordability earlier in the year. Analysts say recent economic pressures quickly reversed that trend. Rising mortgage rates have made borrowing more expensive. They have also reduced buyers’ purchasing power.
The average 30-year fixed mortgage rate climbed from below 6% in late February. It reached about 6.37% in early April, according to Freddie Mac. Mortgage rates tend to follow U.S. Treasury yields. Those yields have risen due to inflation concerns and geopolitical tensions tied to the Iran conflict.
“Mortgage rates have been rising, and that has led us to trim our home sales outlook for the year,” NAR Chief Economist Lawrence Yun said.
Consumer sentiment has also weakened sharply. It has reached record lows. Economists point to concerns about the labor market as another factor holding buyers back. Nonfarm payrolls have declined in six of the past 15 months. This has added to uncertainty about income stability.
Sales fell across all four regions in March. They were down 1% compared to a year ago. Activity remained especially weak in the under-$250,000 price range. This reflects a shortage of entry-level homes.
At the same time, prices continued to rise. The median existing home price increased 1.4% from a year earlier. It reached $408,800. This is the highest level ever recorded for the month of March. It also extends a streak of 33 consecutive months of annual price gains.
Inventory showed modest improvement. However, it remains tight. Total housing supply rose 3% from February to 1.36 million units. That equals a 4.1-month supply at the current sales pace. This is slightly higher than a year ago. It is still below levels seen in a balanced market.
“Inventory remains a major constraint on the market,” Yun said. He added that an additional 300,000 to 500,000 homes would be needed to normalize supply conditions.
The mix of higher borrowing costs and limited supply has forced a downward revision in housing forecasts. The NAR now expects existing home sales to rise just 4% in 2026. That is a sharp drop from its previous projection of 14% growth. Forecasts for new-home sales were also cut. They are now expected to remain flat.
Market participation also reflects ongoing strain. First-time buyers made up just 32% of sales. This is well below the roughly 40% level considered healthy. The median age of a first-time buyer has climbed to 40. That is a record high.
Homes are also taking longer to sell. Properties stayed on the market for a median of 41 days in March. That is up from 36 days a year ago. Meanwhile, all-cash transactions accounted for 27% of sales. This suggests affordability challenges continue to push some buyers out of the market.
Economists expect the housing market to remain sluggish in the near term. Some anticipate a gradual recovery later this year if mortgage rates ease.
“There is little in the near-term backdrop to suggest a quick rebound in sales,” said Daniel Vielhaber, an economist at Nationwide. “We continue to look for sluggish sales this year. This will likely continue in the first half. A gradual pickup could come in the second half and into 2027.”