December 9, 2023

Homes in Centerville, Maryland, USA, Tuesday, April 4, 2023.

Nathan Howard | Bloomberg | Getty Images

Sales of existing homes fell 2.4% in March compared with February, according to the National Association of Realtors’ monthly report.

On a seasonally adjusted annual rate, that translates to 4.4 million units. Sales were down 22% from last March.

The weakness could be due to a sharp rise in mortgage rates. With home prices still at historically high levels, buyers today are increasingly sensitive to daily changes in mortgage rates. Sales in March were likely based on contracts signed in January and February, when prices fluctuated more.

The average rate on the popular 30-year fixed mortgage began in January at around 6.45% and briefly dipped below 6% by the end of the month, according to Mortgage News Daily. But things took a sharp turn for the better in March, with interest rates rising straight back up to 6.45% in the first week of March and then continuing higher, reaching 6.85% by the end of the month.

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Lawrence Yun, chief economist at NAR. “At the same time, however, multiple offers for starter homes are very common, meaning more supply is needed to fully meet demand. This is a unique housing market.”

Supply did increase slightly, but remains historically low. At the end of March, there were 980,000 homes for sale, up 1% from February and up 5.4% from March 2022. At the current sales pace, this represents only a 2.6-month supply. A six-month supply is considered a balanced market between buyers and sellers.

Inventories are now 41% below pre-Covid pandemic levels in 2019. New listings are down 17% from March 2022. The increase in supply is simply due to homes staying on the market longer, averaging 29 days compared to an average of 17 days a year ago.

Tight supply is preventing home prices from cooling as some have predicted. The median price of existing homes sold in March was $375,700, down 0.9% from a year earlier. However, it was the weakest reading since January 2012. From a regional perspective, prices are rising everywhere except the west, where housing prices are the highest.

The median price also suggests more homes are selling at the lower end of the market. Sales of homes priced over $1 million were down 29% from March 2022, but sales of homes priced between $250,000 and $500,000 were down 14%.

“Affordability is not just an issue for first-time homebuyers, but also for many repeat buyers who still need a mortgage,” said Danielle Hale, chief economist at, indicating a need to buy or sell to would-be sellers 82% of them feel “locked in” by existing low mortgage rates.

“This suggests that both the supply and demand for existing homes will be sensitive to changes in mortgage rates,” Hale added.

Cash continues to dominate the market, with all-cash transactions accounting for 27% of sales in March, down slightly from 28% in February but still above historical norms. Investors accounted for 17 percent of buyers, down from 25 percent last summer. First-time buyers accounted for 28 percent of sales, down from 30 percent the year before. Historically, that share has been closer to 40%.

“High house prices and higher mortgage rates clearly present challenges,” Yun said of the share of first-time buyers.

Correction: Sales of homes priced between $250,000 and $500,000 fell 14%. An earlier version misstates the scope.