Two directions for home sales amid economic turmoil 

With national economic turmoil taking center stage this spring, home sales activity may hinge largely on consumer confidence.

And right now, many prospective buyers and sellers feel uncertain. While the latest economic data has some bright spots, several measures were taken before the April 2 tariff announcements, and volatility is likely as policies continue to shift.

Inflation, mortgage rates and the impact of tariffs

The March Consumer Price Index provided some good news about inflation, coming in below expectations at 2.4%, and headline consumer prices ticked down for the first time in nearly three years.

Mortgage rates also fell slightly, according to Freddie Mac's weekly survey, averaging 6.62%. But that weekly average masked the volatility of the past two days, when a bond sell-off caused mortgage rates to surge. Rates hit 7% on April 9, according to Mortgage News Daily, prior to President Donald Trump's announcement of a 90-day pause on tariffs for some countries. During the morning hours of April 10, MND had the 30-year rate at 6.92%.

Where rates go next will continue to be influenced by tariff policies. Resuming or raising tariffs could result in another sell-off in bonds and increase consumer prices — scenarios that would push interest rates up and force the Federal Reserve to hold off on rate cuts.

In pre-tariff times, the latest inflation report would have given the Fed more confidence to lower interest rates, but now? "Rate cuts remain unlikely as policymakers wait to see the effects of recent tariff changes reflected in future data," said Sam Williamson, senior economist at First American.

A market freeze?

Economic moving targets — including wild swings in the stock market — are putting consumers in a tough spot.

"It's likely that financial anxiety, rapidly changing economic news and the rising chance of a recession freeze the housing market," said Chen Zhao, Redfin's economic research team lead.

"But it's also possible that economic turmoil pushes down mortgage rates and/or people decide to bite the bullet now instead of waiting for conditions to perhaps worsen, encouraging homebuyers and sellers to jump into the market."

It's not clear how many will actually take the leap, however. Uncertainty around tariffs is seeping into homebuying discussions, remarked Desiree Bourgeois, a Redfin Premier agent in Detroit, in Redfin's weekly report.

"Tariffs are coming up for the first time. I hosted an open house over the weekend, and some of the younger buyers were concerned about how they're going to impact the housing market," Bourgeois said. 

"They're hearing the words 'tariffs' and 'recession,' and it's making them nervous that if they buy now, the value of their home will decline, and they don't know whether mortgage rates will go up or down."

More are taking the leap

Still, there are signs that some consumers are moving ahead with home purchases. Mortgage applications jumped 20% during the week ending Apr. 4, when rates briefly fell to the lowest levels since October, noted Joel Kan, deputy chief economist at the Mortgage Bankers Association.

Both refinance and purchase loans rose, with the unadjusted purchase index up 10% compared to a week earlier and up 24% from a year ago.

Those mortgage applicants may also be taking advantage of an increase in new listings, which were up 10.3% compared to a year ago, according to Redfin.