Economic Uncertainty Deepens Housing Market Slump

Despite being the traditional peak of the home-buying season, this spring’s housing market has left much to be desired. In April, existing-home sales declined for the second consecutive month, as persistent affordability challenges and fresh economic anxieties continued to weigh on buyers’ minds.

According to the National Association of Realtors (NAR), U.S. existing-home sales slipped 0.5% in April from the previous month to a seasonally adjusted annual rate of 4 million homes, the slowest April pace since 2009. Compared to a year earlier, sales were down 2%, underscoring the market’s ongoing struggle to regain momentum.

A Spring Slowdown That Feels Like a Freeze

The spring months are typically the busiest for the housing market, as warmer weather and school calendars align to bring out buyers in droves. This year, optimism has been overshadowed by a combination of steep prices, high mortgage rates, and growing macroeconomic uncertainty.

Median home prices rose 1.8% year-over-year to $414,000, the highest for any April on record.
Even with more homes available, demand is tepid. Inventory rose 9% month-over-month, and is up over 20% compared to April 2024, but buyers haven’t followed.

As Lawrence Yun, chief economist at NAR, bluntly put it: “Even with increasing inventory, we are not getting a pickup in home sales. The affordability condition is clearly hurting the market.”

Mortgage Rates, Tariffs, and Buyer Hesitation

Mortgage rates remain a central culprit. With rates hovering near two-decade highs, many potential buyers have been priced out or forced into waiting.

Volatility in the bond market is amplifying those concerns. A poor auction of 20-year Treasury bonds this week raised alarms about rising federal deficits, pushing Treasury yields, and mortgage rates, higher.
The rollout of new tariff policies also contributed to April’s unease. The resulting market turbulence led some buyers to walk away altogether. Nearly 14% of pending home sales were canceled in April, the highest rate for the month since 2020, according to Redfin.

Even though mortgage purchase applications rose 13% year-over-year in mid-May, suggesting interest remains, agents report that buyers have become far more cautious and far more aggressive in negotiations. In some areas, buyers now hold the upper hand.

Why Inventory Is Finally Climbing

While demand remains sluggish, supply is on the rise, albeit for less-than-ideal reasons.

Many homeowners can no longer afford to wait. Job changes, births, and other life events are forcing their hand, even in an unfavorable rate environment.
Investors and second-home owners, fatigued by rising maintenance and tax burdens, are also bringing properties back to market.
Builders, facing softening demand in some regions, are also contributing more newly built homes to overall inventory.

The result: 1.45 million homes were on the market or under contract by the end of April, giving buyers more options, but also increasing days on market for sellers. The typical home sold in April sat for 29 days, up from 26 a year ago.

Outlook: A Market in Limbo

The housing market is no longer red-hot, but it’s not crashing either. It’s stuck in a kind of limbo, caught between two conflicting forces:

Structural demand (millennials entering peak buying years, low unemployment, tight rental markets)
Economic drag (high rates, geopolitical jitters, inflation concerns, policy uncertainty)

While some markets are cooling, others remain competitive. Prices are declining in 23 of the top 100 metros, according to Intercontinental Exchange, but that still leaves most markets in positive territory.