“Housing
demand
is
surprisingly
stable
given
the
macro
headwinds,
and
unless
rates
spike
again
we
expect
2025
to
finish
with
more
new
home
sales
than
last
year,”


Zillow
senior
economist

Orphe
Divounguy
said
in
a
statement.

“Despite
economic
jitters
and
a
cooling
labor
market,
the
spring
housing
market
is
more
active
than
last
year.
Lower
mortgage
rates
compared
to
last
year
are
helping
to
keep
the
momentum
alive.”

There’s
good
news
for
homebuyers
in
the
report
as
well.
Inventory
for
new
homes
hit
503,000
in
March,
which
is
7.9%
higher
than
in
March
2024
and
up
0.6%
from
February.
There
was
8.3
months
of
supply,
down
from
February
but
1.2%
above
year-ago
levels.

Prices
also
dropped,
with
the
median
sale
price
coming
in
at
$403,600,
down
1.9%
month
over
month
and
7.5%
year
over
year.

The
rise
in
sales
was
driven
by
a
strong
increase
in
the
South,
which
had
been
sagging
in
recent
months.
The
often
volatile
Northeast
experienced
a
sharp
drop,
while
the
West
had
a
slight
decline
and
the
Midwest
had
a
small
gain.

What
happens
in
the
next
new-home
sales
report
is
anyone’s
guess.
The
magnitude
of
Trump’s
new
global
tariff
regime
shocked
the
world,
and
businesses
and
industries
are
scrambling
to
adjust.

The
back-and-forth
nature
of
Trump’s
approach
doesn’t
help.
He
twice
paused
Canadian
and
Mexican
tariffs
mere
hours
after
they
took
effect,
and
he

did
the
same
with
the
global
tariffs,
which
are
now
on
a
90-day
pause.

More
concerning
for

homebuilders
is
that
he
not
only
allowed
the
tariffs
on
China
to
continue
but
actually
raised
them
to
an
astronomical
rate
of
145%.
China
is
a

critical
trade
partner
for
homebuilders,
who
rely
on
it
for
a
number
of
building
materials
and
appliances.

The
good
news
for
builders
is
that
Trump
has
struck
a
softer
tone
on
China
this
week,
suggesting
that
he
might

lower
the
tariff
rate
by
more
than
half
if
the
two
countries
can
strike
a
new
trade
deal.

He’s
said
similar
things
about
tariffs
on
other
countries,
but
as
of
yet
there
is
no
indication
he
has
struck
a
deal
with
any
country.

Even
if
things
improve
on
the

tariff
front,
more
recent
housing
data
suggests
that
market
turmoil
and
economic
uncertainty
are

causing
problems
of
their
own. 

Consumer
confidence
and

builder
sentiment
have
both
fallen
sharply
since
the
start
of
Trump’s
term.
And
there
are
signs
that
some
prospective
homebuyers
are
pausing
their
home
searches
until
they
have
more
clarity.

The

new
construction
report
for
March
showed
single-family
starts
dropping
by
9.7%
annually,
while
permits
dropped
slightly
as
well.

A
dynamic
is
forming
in

some
markets
where
sellers
are
hoping
to
list
and
offload
their
homes
before
any
negative
impacts
from
the
tariffs.
But
a
tepid
response
from
buyers
presents
a
disconnect
that
could
stall
local
housing
markets.

Mortgage
applications
also

dropped
12.7%
last
week
as
a
result
of

mortgage
rates
that
have
been
pushed
back
toward
7%,
a
result
of
the
bond
market
sell-off
and
retreat
from
the
dollar.
But
mortgage
applications
remain
above
2024
levels.

“In
addition
to
homebuilders’
challenges
stemming
from
potential
tariff
impacts
and
rising
labor
costs,
the
housing
market
is
facing
a
repeated
challenge
from
a
recent
jump
in
mortgage
rates,
which
are
likely
to
remain
volatile
and
elevated,
particularly
considering
the

Federal
Reserve’s

independence
being
called
into
question,”
Selma
Hepp,
chief
economist
for

Cotality,
said
in
a
statement.