U.S. Existing Home Sales Expected to Decline 3.3% in March, Prices Continue to Rise 4.6% Year-over-Year

In March, the U.S. housing market exhibited signs of a slowdown in existing home sales, despite a persistent upward trend in home prices. Economists generally anticipate that the sales volume of existing homes, which constitute the majority of residential transactions, will slightly decrease compared to new homes. Industry data suggests that, compared to the same period last year, existing home prices are likely to continue their upward trajectory.

Ask Aime: What impact does the slowdown in existing home sales have on the broader housing market?

The National Association of Realtors is set to release relevant data this Thursday. Market expectations indicate that the seasonally adjusted annual sales rate for existing homes may drop from 4.26 million units in February to 4.12 million units. Despite the cooling in sales, the upward trend in prices continued in March. For instance, data from the real estate company redfin shows that home prices in March increased by 4.6% year-over-year, although this index uses a different methodology than the National Association of Realtors, it still reflects the upward pressure on home prices.

According to a survey conducted by Freddie Mac between February 25 and March 10, involving over 100 real estate experts, the average prediction is that home prices will rise by 3.4% in 2025. This forecast is lower than the 5.8% increase recorded by the Freddie Mac index in 2024. However, recent market developments are altering these expectations. The latest forecast from zillow predicts that its home price index will decrease by 1.9% in 2025. Zillow's senior economist, Kara ng, notes that the decline in mortgage interest rates in March attracted more sellers to the market, altering the balance between buyers and sellers. "This trend has significantly weakened the momentum for further price increases," she observed. "The speed at which sellers return to the market, relative to buyers, is the key factor determining the direction of home prices."

Currently, the increase in market inventory is a crucial factor that could lead to a decline in home prices. According to data from Realtor.com, the number of homes listed for sale in March 2025 was nearly 30% higher than in the same period last year, but still 20% lower than in March 2019. Realtor.com's senior economist, Joel Berner, stated that if this trend in supply growth continues, market inventory could return to pre-pandemic levels by the end of this year. He noted that as supply increases and consumer confidence wanes, home prices may soften further.

Berner also mentioned that in regions like Austin, Texas, the number of homes listed for sale has surpassed pre-pandemic levels, and the asking price per square foot has already begun to decline. "With fewer buyers and more listings, we expect home prices to fall," he said. "This is especially true in areas where inventory has already exceeded pre-pandemic levels. The national supply and demand dynamics are also approaching this turning point." Zillow's Ng added that for buyers waiting for an opportunity to enter the market, the decline in home prices is actually good news. "This is an opportunity for buyers to open the door to the market."