The National Association of Realtors in the US said that sales of existing homes dropped in March. This marked a lacklustre start to the spring selling season, suggesting challenges for real estate ownership persist. Mortgage rates are still relatively high, while home prices remain elevated. Furthermore, changes in trade policy are bringing down consumer confidence and increasing financial stress, which is weighing on demand.

• Sales of existing homes in the US fell by 5.9% in March over the previous month, marking the biggest monthly decline since 2022. In a Bloomberg survey, economists were expecting a 3.1% drop. There were 4.02 million home sales in March, the lowest since October 2024.
• Several factors are weighing on demand. Firstly, mortgage rates persist at elevated levels, particularly with the US Federal Reserve Board electing to hold steady at recent meetings. Additionally, home prices are relatively high, raising affordability concerns.
• Finally, tariffs are weighing on consumer confidence, with expectations growing that the US economy might weaken. A slowdown in economic conditions could impact already financially stressed consumers, pulling down demand.
• The Mortgage Bankers Association of America reported on Wednesday that mortgage applications dropped by 12.7% over the week ended April 18. Over that time, the rate on a 30-year fixed-rate mortgage increased to 6.90% from 6.81%.
• Concerns are rising that Canada’s real estate market could be troubled by global trade tensions, which are expected to hurt economic growth. Last week, the Canadian Real Estate Association said existing home sales dropped by 4.8% in March.

The US real estate market seems to be feeling the impact from a loss of confidence in the health of the economy. Tariffs could also impact the supply side of the real estate market. Tariffs are expected to push up prices, including for several key inputs in the construction of homes. As trade tensions persist and weigh on consumer and business confidence, there could be some soft real estate market activity.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.