Rising home prices, elevated mortgage rates: Why the spring housing market hasn’t bloomed. USA TODAY

Spring has not yet sprung in the housing market.

With still-rising home prices and elevated mortgage rates, affordability challenges are holding homebuyers back.

“Homebuyer affordability remained constrained in March as elevated mortgage rates and low inventory kept prices high, leading many prospective homebuyers to delay decisions to enter the market,” said Edward Seiler, MBA’s associate vice president, Housing Economics, and executive director, Research Institute for Housing America.

Is cash king when buying a house?

“More than a third of repeat buyers in the Mid-Atlantic housing market paid cash for their home, and the majority of other repeat buyers have significant equity that they are able to roll into the purchase of a new home,” says Sturtevant. “So, while affordability has gotten worse, for some buyers, the higher mortgage rates have not been a deterrent.”

What is happening with home sales?

Pending home sales decreased in March for the first time since November 2022, according to the National Association of Realtors. Three U.S. regions posted monthly declines while pending sales in the South increased. All four regions saw year-over-year declines in transactions.

The Pending Home Sales Index – a forward-looking indicator of home sales based on contract signings – decreased by 5.2% in March. Year over year, pending transactions were down by 23%.

Unsold inventory sits at a 2.6-month supply at the sales pace, unchanged from February but up from 2.0 months in March 2022.

“The lack of housing inventory is a major constraint to rising sales,” says NAR Chief Economist Lawrence Yun. “Multiple offers are still occurring on about a third of all listings, and 28% of homes are selling above list price. Limited housing supply is simply not meeting demand nationally.”

“While many prospective buyers currently remain on the sidelines, MBA expects mortgage rates to decline slowly as the year progresses, which will help with affordability and may spur sales activity,” says Seiler.

What’s happening with home prices?

February marked the first time in 131 months that home prices fell year-over-year, ending the longest price growth streak on record. But it also was the first time in seven months that home prices had climbed up month over month.

HOWARD ZELIN