Existing Home Sales Hit 9-Month Low as Mortgage Rates Surge

First-time buyers and cash buyers are retreating from the market. The share of first-time buyers dipped to 32% in March, down from 34% in the previous month. All-cash transactions dropped to 27% of total sales, falling from 31% in February.

This retreat is the result of a sequence of global shocks. The war in Iran began on February 28, triggering global energy and trade shocks. A White House announcement of a Strait of Hormuz blockade sent oil prices higher, which in turn pushed mortgage rates upward. Mortgage rates surged from the high-5% range in February to around 6.5% by the end of March.

Existing home sales fell 3.6% in March, hitting a seasonally adjusted annual rate of 3.98 million units. This is the slowest pace for the month of March since 2009. Sales were down 12.2% annually in the Northeast and 3.2% in the Midwest, while the South and West saw small annual upticks of 2.2% and 1.3%, respectively.

Despite the slow pace of sales, the median sales price for an existing home reached $408,800 in March, its highest level on record for March. This marks the 33rd consecutive month of year-over-year price increases, with prices rising 1.4% year-over-year.

Inventory remains a constraint. The U.S. has a 4.1-month supply of unsold inventory, up from 3.8 months in February. Lawrence Yun, chief economist at the National Association of Realtors, stated that 300,000 to 500,000 more homes for sale would be required to balance the market.

Because of the upward trajectory of mortgage rates, the National Association of Realtors has revised its 2026 existing home sales forecast from 14% growth to 4% growth. New home sales totals were revised lower to zero growth, down from earlier projections of 5% growth.