Slow pace of home sales points to a subdued spring season 

Hopes for a busy spring selling season may be fading as home sales lag behind last year and economic uncertainty continues to weigh on would-be buyers — but mortgage rates remain stable.

February's pending sales were up 2% after plunging in January, but down 3.6% compared to a year ago, according to the latest data from the National Association of Realtors. In 2024, home sales fell to a 30-year low, so this year-over-year decline signals an even more sluggish start for the housing market, suggested Lisa Sturtevant, chief economist at Bright MLS.

And that's due in part to the current economic and political climate.

"A lack of inventory and high mortgage rates have been constraints on home sales activity but in 2025 there is a new challenge — economic uncertainty," Sturtevant said. "While inventory is expected to increase and there is still a lot of pent-up demand, consumer anxiety and rising concerns about an economic downturn could hinder market activity."

Tariffs remain a wild card

Until there's more clarity around which tariffs will be implemented on April 2 and what impact they will have on prices and inflation, economic uncertainty is likely to influence consumer sentiment and behavior. The Trump administration's 25% tariff on cars and car parts, announced on Mar. 26, is expected to raise prices in the short-term and slow economic growth, stoking fears of stagflation.

Despite the turmoil over tariffs in the overall economy, mortgage rates remain steady. The 30-year fixed-rate mortgage averaged 6.65% this week in Freddie Mac's survey, down slightly from last week's 6.67%.

Affordability is also putting a lid on home sales

The typical homebuyer's monthly housing payment hit an all-time high of $2,807 during the four weeks ending March 23, according to Redfin's weekly market report.

ATTOM's quarterly Home Affordability Report showed a similar trend: While affordability didn't change much in the first quarter, median-priced single-family houses and condos were less affordable compared to historical averages in 97% of counties across the country, and that's not likely to improve. 

"If history is a good guide, prices will rise as we head into the peak buying season that's about to start, which will worsen affordability measures," said ATTOM CEO Rob Barber in the report.

New home sales, purchase applications rise

There was also some good news coming out of this week's economic reports. New home sales were up 5.1% in February compared to a year ago, according to the U.S. Census Bureau. The big jump in sales was led by homes priced in the $300,000-$399,000 category, a sign that affordability is driving activity in the new home market, said Joel Berner, senior economist at Realtor.com.

"The market conditions are more favorable to buyers, builders are prioritizing delivering more affordable new inventory, and the cost of ownership for new homes tends to be lower than existing homes," Berner said. "There is a common misconception that newly-built homes are too expensive for the typical buyer, but especially in the South, we see that this is not the case."

Mortgage applications also gained some momentum. While overall application activity was down 2% compared to a week prior, purchase applications ticked up and were 7% higher than a year ago, according to the Mortgage Bankers Association.

"Last week's purchase activity was driven primarily by a 6% increase in FHA applications, as the combination of loosening housing inventory and slowly declining mortgage rates have presented this segment of buyers with more opportunities," said Joel Kan, MBA's Vice President and deputy chief economist, adding that VA loans have also seen more activity.