March Housing Shake-Up: Sales Decline and Inventory Grows, Prices in Focus

Model house and keys with couple signing documents.

U.S. housing market hits lowest March sales since 2009 financial crisis as mortgage rates near 7% and economic uncertainty dampens buyer enthusiasm.

Quick Takes

  • Existing home sales fell 5.9% to 4.02 million units in March, marking the slowest pace since the 2009 subprime mortgage crisis
  • Housing inventory jumped 19.8% compared to last year, but median home prices still rose 2.7% to $403,700
  • First-time buyers represented 32% of purchases, below the historical average of 40%, while cash transactions comprised 26% of sales
  • Properties stayed on the market for an average of 36 days, longer than the 33-day average from a year ago
  • Economic factors including high mortgage rates, inflation concerns, and employment uncertainty continue to pressure the market

March Housing Sales Hit 15-Year Low

The U.S. housing market experienced significant cooling in March, with existing home sales plummeting to a seasonally adjusted annual rate of 4.02 million units. This 5.9% decrease fell below economists’ expectations of 4.13 million units and represents the slowest March pace since the 2009 financial crisis. The National Association of Realtors (NAR) data reveals a market struggling under the weight of persistent affordability challenges, particularly as mortgage rates hover near 7%, significantly reducing buyer purchasing power in an already expensive market environment.

Market conditions appear increasingly challenging as many of March’s sales reflected contracts signed during periods when mortgage rates exceeded 7%. This rate environment, combined with broader economic uncertainty about inflation, employment stability, and potential impacts from tariffs, has created significant headwinds for potential buyers. Meanwhile, distressed sales including foreclosures increased to 3% from 2% a year ago, potentially signaling growing financial strain among some homeowners.

Inventory Growth and Price Moderation

One notable bright spot for buyers is the significant increase in available housing inventory, which grew 8.1% in March to 1.33 million units—a substantial 19.8% jump from March of last year. This growing supply represents 4 months of inventory at the current sales pace, up from 3.2 months a year ago, moving the market incrementally closer to the 6-month supply typically considered balanced between buyers and sellers. The inventory increase has begun moderating price growth, though not yet reversing the upward trend.

Despite growing inventory, the median home price in March reached $403,700, representing a 2.7% increase from the previous year. However, this marks the smallest annual gain since August, suggesting price growth is decelerating. The NAR also reported that properties remained on the market for an average of 36 days in March, longer than the 33-day average from the previous year—another indicator of cooling market conditions as buyers take more time to make decisions.

Changing Buyer Demographics and Regional Variations

First-time homebuyers continued to face significant challenges entering the market, comprising just 32% of purchases—unchanged from the previous year but well below the historical average of 40%. This persistent underrepresentation of first-time buyers highlights the ongoing affordability crisis facing younger Americans attempting to build wealth through homeownership. Meanwhile, all-cash transactions decreased slightly to 26% from 28% last year, reflecting changing investor sentiment in the current economic climate.

Regional variations paint an uneven picture of the housing market. The West was the only region experiencing a year-over-year sales gain, primarily driven by strong activity in the Rocky Mountain states. This regional exception to the national downtrend may reflect local economic conditions, migration patterns, or specific inventory situations.

Future Market Outlook

The housing market faces continued challenges in the coming months as economic uncertainties compound existing affordability issues. The NAR reports a concerning rise in canceled contracts during March, with potential for further cancellations as stock market volatility impacts buyer confidence. Housing economists warn that current conditions may deteriorate further if high prices, elevated mortgage rates, and consumer anxiety about inflation and job security persist.

For current homeowners, however, there remains a silver lining. Despite market cooling, overall residential real estate wealth continues to reach new heights according to NAR chief economist Lawrence Yun. This divergence between transaction volume and total housing wealth highlights the complex nature of the current market—challenging for new entrants but still wealth-preserving for existing owners. The coming months will reveal whether inventory increases and price moderation will finally bring relief to prospective buyers.

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