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Overview: The Housing Market in March 2025
The spring residential real estate market started slowly, with home sales activity declining in March. Traditionally, spring is the busiest season for real estate, but an increase in mortgage rates and inflation could be tempering housing sales.
Existing-home sales declined in March following a significant increase last month, which marked the largest monthly rise since February 2023. Year-over-year, all four U.S. regions recorded a decline in sales. In contrast, the Pending Home Sales Index (PHS) showed year-over-year increases in three out of the four regions, achieving its strongest performance in a year. Despite March’s slow market activity, NAR expects that inventory will grow steadily from home construction, job growth will keep demand strong, and life-changing events will require people to move.
From a broad economic perspective, both the Federal Reserve's short-term interest rate and the 10-year Treasury yield remained unchanged during the third month of the year. Nevertheless, March CPI inflation accelerated further from its target rate, possibly delaying the Federal Reserve’s plans for cutting interest rates and keeping mortgage rates high.
March's employment growth is an important indicator to watch, as the construction industry experienced large job additions. In terms of housing supply, new listings experienced a smaller year-over-year increase at the beginning of spring, and the U.S. Census Bureau reported decreases in both housing starts and building permits.
The Federal Reserve did not alter its short-term interest rate in March, keeping it at 5.5% since August 2023. However, several rate cuts are expected later in the year. During the COVID-19 lockdown, the Federal Funds Rate was near 2%.
In March, a total of 315,000 net payroll jobs were added, still above the average monthly gain of 242,000 over the last 12 months. As part of that, the construction industry added 40,000 new jobs, up by 664,000 from four years ago.
In March, privately-owned housing construction was at a seasonally adjusted annual rate of 1.32 million. This is 14.7% below the revised February estimate of 1.55 million, and 4.3% below last year’s rate of 1.38 million.
March's inventory of unsold listings increased by 4.7% from last month, standing at 1.11 million homes for sale. Compared with last year, inventory levels were up 14.4%. Demand is currently outpacing inventory.
Privately-owned housing units authorized by building permits in March were at a seasonally adjusted annual rate of 1.47 million. This is 3.7% below the revised February rate of 1.52 million, but 2.1% above last year's rate of 1.44 million.
