US March Home Sales See Largest Drop in 16 Months...Mortgage Rates Surpass 7%

March Existing Home Sales Down 4.3% MoM
Decline in March After Early Year Rebound

As mortgage rates in the United States soared above 7%, the housing sales market experienced its largest decline in 1 year and 4 months last month.

According to the National Association of Realtors (NAR) on the 18th (local time), the number of existing home sales in the U.S. in March was 4.19 million, down 4.3% from the previous month. This marked the largest decline in 16 months since November 2022. Compared to a year ago, sales decreased by 3.7%.

The number of existing home sales in the U.S. fell to the lowest level in about 30 years last year as the benchmark interest rate surged to 5.25-5.5%. However, as mortgage rates declined in January and February this year, sales rebounded and seemed to recover, but then declined again in March. It is analyzed that the rise in mortgage rates starting in February put pressure on March sales. According to Freddie Mac, the 30-year fixed mortgage rate in the U.S. reached 7.1% as of the 18th.

High interest rates are expected to persist for a long time, and the contraction of the housing sales market is likely to continue.

Jerome Powell, Chair of the U.S. Federal Reserve (Fed), recently effectively confirmed a delay in rate cuts. At a forum held in Washington D.C. on the 16th, he stated, "Recent data has not clearly given greater confidence that inflation is making progress toward the Fed’s goal," and "Instead, it suggests that achieving such confidence may take longer than expected."

As a result, Treasury yields rose. The 10-year U.S. Treasury yield, which serves as the benchmark for U.S. mortgage rates, is currently hovering around 4.64%. This yield surpassing 4.5% marks the first time in 5 months since mid-November last year.

A shortage of housing supply is also pushing up home prices. The median price of existing homes in the U.S. in March was recorded at $393,500, up 4.8% compared to the same period last year.

Lawrence Yun, Chief Economist at NAR, said, "Home sales have essentially stalled," and added, "More inventory is needed."