Tariffs are creating perfect storm for housing market

Over the last month, home sales have definitely picked up, especially when compared to last year’s very low levels. Weekly pending home sales counts have been at or above the year-ago levels for four weeks in a row now.

This week, there were 3.8% more weekly pending home sales than last year at this time. In total, there are now nearly 2% more homes in contract nationally than a year ago. So, finally, home sales are starting to show growth over 2024.

Unfortunately, we also had a huge spike in mortgage rates as the chaos of tariffs roiled markets, making U.S. debt less attractive, which drives up borrowing costs for Americans.

So the question is, will this little bit of market momentum be able to hold up?

I expect at least a couple more weeks of rising sales before we would see the impact of mortgage rates back above 7%. The tariff policies are unclear and unstable, so nobody knows if these conditions will continue. If we back off the tariffs, then interest rates could come back down.

But if these conditions do continue, home sales are going to slow down quickly, and home prices are likely to get hit also.

The timing of this shift is critical, because we’re rolling into peak homebuying season.

Unsold inventory of homes on the market has been rising for years and is already at the highest level since 2019 nationally. A new variable this spring is that there are also more sellers coming to market each week than there have been in five years.

Total unsold inventory is up, and the weekly pace of new sellers adding to that inventory is up too. Why are these sellers emerging now after so many years on the sidelines? One interpretation is that many of these sellers are acting on perceptions of the economy getting worse, perhaps trying to capture their equity to build their cash cushion.

The tariffs are really in danger of creating the perfect storm for housing market chaos; raising mortgage rates at a time when we finally have ample supply in much of the country while decreasing the economic outlook for many homeowners who might need the liquidity of their equity.

The storm isn’t hitting the whole country evenly, and we’ll explore the details next week, Thursday, April 24, in our monthly HousingWire Altos webinar.

There is so much happening so quickly that we’ll spend an hour with all the data. If you need to understand or communicate about this housing market, join us.

Weekly pending home sales

There were 72,000 newly pending home sales transactions this week for single-family homes, plus another 14,000 condo sales. That’s 3.8% more sales started than the same week in 2024. These are not huge gains, but they are gains. January and February had fewer home sales than a year ago. March and April now have more home sales, so the gains are now measurable.

These are improvements that stemmed from cheaper cost of money than we had earlier in the year. But that improvement is suddenly fragile. So the question now is, how long can this little bit of home sales optimism last?

Mortgage rates shot up by nearly 50 basis points in one week after the most recent tariff announcements and did not recede after the U-turn on the policies after a few days. The stock market has crashed and bounced with each announcement, but the 10-year Treasury is still under pressure, which keeps mortgage rates elevated, and the spread between the 10-year and the 30-year fixed mortgage is also growing, which it does as market risk climbs. So, mortgage rates got a double whammy from tariff policy.

In the last few years, we can really see dramatic slowdowns in homebuyer activity when rates have jumped over 7%. We saw this in September 2022, again in September 2023, in May 2024, and in February 2025. Sharply fewer home sales in these moments. Look for that now too, unless conditions change.

In this chart of the weekly pending home sales, the blue line is last year. Sales always peak at the end of Q2, and in 2024, that’s when mortgage rates peaked too. That set us up for a very slow May, June, July period. You can see the blue line here with only 60 to 70 thousand home sales each week during that period, rather than 80 or 90 thousand pending home sales per week.

Will this year’s purple line be able to continue to rise above last year’s weekly sales rate? That’s what we’re watching.

Quite obviously, conditions are changing fast. So that’s why we do this data work each week. You don’t want to wait six or eight weeks to learn about changes in the housing market.

The takeaway on home sales; late March and early April finally had some momentum in the weekly pending home sales, and I currently expect that momentum to continue in the data for at least one more week. But then we’re on the lookout for a pullback in homebuyer activity, because after the tariffs, our homebuying conditions are so much worse. The pullback could be very sharp. Stay tuned.

New listings

Home sales growth has been one trend of the last month. The other trend has been increasing levels of sellers each week. More supply is coming but it’s not huge supply.

There are still many parts of the country which actually have tight inventory and not many sellers. But it is more. Nationally, there are more sellers each week than we’ve had in six years. This week continues that trend. There were just over 76,000 single-family new listings unsold this week. That’s the most since 2019. There were another 15,000 new listings — immediate sales — that are already in contract. There are 7% more sellers each week than a year ago, and only 4% more sales. Supply will continue to build.

This chart has a line for the weekly new listings each year. The purple line for 2025 is essentially back to the old normal levels. The gray lines are years past. The gray lines at the top of this chart are from the years 2017, 2018 and 2019. The number of new listings each week is finally back to the old normal levels.

If you follow along with the HousingWire Altos data each week, you know that the Sunbelt states have a lot more sellers, and the Northeast still has very few new listings each week.

That bifurcation has been easing a bit, in that even the Northeast has also been seeing growth in new listings vs. last year. In the HousingWire Altos webinar next week, we’ll spend a lot of time with the local markets to see if places like Connecticut are finally getting some inventory growth. Or does a market slowdown actually exacerbate the North-South market differences in 2025? It is not yet clear to me.

If the market hits the brakes now, what happens to the Northeast? More sellers? Fewer sellers? That’s a key to be watching for.

Inventory

Unsold inventory is the other part of the housing supply equation. There are now 702,000 unsold single-family homes on the market. That’s 33% more than a year ago. Last year at this time, mortgage rates were rising and inventory was rising along with it.

Suddenly our April looks a lot like last year again, with spiking mortgage rates. Inventory rose by 1.6% for the week. That’s a pretty fast clip but not alarmingly fast. Inventory should build in April. We should expect 1–2% inventory growth per week. If the unsold supply of homes on the market surges by 2–3%, that would be a signal of a slowing market. We’re not there yet, but we’re watching.

In this view, I have the last decade of unsold inventory of single-family homes. I’ve highlighted where we are this week and, for example, the unsold inventory back in 2018.

At that time, there were 850,000 homes on the market. There are 702,000 now. As I mentioned, most of the unsold inventory now is in the Sunbelt — Florida, Texas, Arizona, and Georgia, as well as Colorado.

The Northeast is still very tight with few unsold homes. It was this moment in 2020 when the three weeks of the pandemic housing market crash were over, and we started buying every house in sight. Rates fell dramatically, inventory fell dramatically.

By the end of 2025, we’ll be back to the old normal levels of homes on the market. The pandemic shortage will finally be over.

Home prices

The median price of single-family homes in this week’s pending home sales is $399,000. That’s a fraction higher than a week ago and 2.5% above last year at this time. As sales have stayed a little improved over 2024, home prices are also staying just barely positive.

Does economic and financial market turmoil create the conditions where home prices shift negative? Do we see notable year-over-year home price declines? Do we see measurable monthly declines in home prices? These declines happened in 2022.

I’ve highlighted the two moments here. The light green line is 2022. In June and September of that year, consumers were shocked by how fast things changed, and they stopped buying homes. As a result, prices dropped. These changes in the weekly pending home sales data preceded the headline price declines, which weren’t visible until the spring of 2023 — 6 or 8 months later.

That’s what we’re on the lookout for now. Does the perfect storm of these policies drive rapid monthly home price declines like we can see in the line from 2022?

Home prices are already fragile. Each of the measures of home prices is just barely positive now vs. last year at this time. But home prices have not gone negative. The weekly pending median price is 2.5% greater than last year. In this chart, the purple line is this year. It’s been above 2024 all year — just barely — but home prices are slightly up.

If conditions ease — maybe mortgage rates drop back down, maybe we get lucky and they pull back more of the tariffs — then we could see this year’s trend continue with slight price appreciation. But if consumers have to stop buying homes, what we’re watching for is any dip in home prices like we saw in 2022.

Price reductions

In keeping with the theme of recent weeks with home sales picking up, for three weeks in a row now, price reductions have not been accelerating.

As we’ve had a little momentum with home buyers, that’s helped sellers not have to cut prices. As of now, 35.2% of the homes on the market have taken a price cut. That’s up just 13 basis points from a week ago. Price cuts have been hovering around 35% of the market for three weeks.

However, two things to keep in mind with price reductions. First, they’re already high, with 35% of homes sitting unsold having reduced their asking price from the original list price. That’s more than any April in a decade. Demand is already pretty thin, of course, so any changes in demand are going to be very sensitive here.

The second thing to note is that this is the first place we’ll see the impact of recently spiked mortgage rates back over 7%. If rates stay there, we should see price cuts move further north again quickly. Look for that by the end of the month, in the next few weeks.

Price reductions are probably the most sensitive indicator of demand shifts. If a house is on the market now, and a seller expects an offer this weekend which doesn’t come, by Monday some of those sellers choose to drop the price to stimulate demand.

We see those new price cuts as a bump in the slope of this line here. You can see those changes in, for example, September of 2022 here in the teal-colored line. You can see last year at this time when mortgage rates jumped back to 7.5%. The 2024 blue line at the end of April started climbing. Because homebuyer demand stalled.

In all these cases, this price reduction shift was a clear leading indicator for future home sales and sales prices, both of which turned lower. If an offer isn’t made today, that’s a sale that doesn’t close in May. Ok, that’s all the data we have time for today.

If you need to communicate about this housing market with potential buyers and sellers — you should join us at Altos.

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