Why the Spring Home Buying Season Is Shaping Up to Be a Disappointment
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Visit us at pgm.com forward slash ETFs. Here's your money briefing for Friday, May 23rd. I'm Mariana Aspuru for The Wall Street Journal. The housing market still hasn't found its footing. Mortgage rates are hovering around 6.75%. Prospective buyers and sellers are worried about the economy. And prices aren't that much lower than record highs.

Meaning, the spring home buying season has been underwhelming. The spring is crucial for the real estate industry. And if the market is slow this spring, it can be hard for home sales to recover in the fall. And so it really sets the tone for what we might expect for the whole year.

I spoke with Wall Street Journal reporter Nicole Friedman about how the latest numbers can help us understand what happened and what's next. That's after the break. Isn't home where we all want to be? Reba here for Realtor.com, the pro's number one most trusted app. Finding a home is like dating. You're searching for the one. With over 500,000 new listings every month, you can find the one today.

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The spring housing market seems to have been a disappointment for buyers and sellers. Wall Street Journal reporter Nicole Friedman joins me to talk about what happened. Nicole, you write about how this housing season is shaping up to be a dud. What key indicators suggest that?

So the most important indicator is just the number of home sales. And that has been very low for a couple of years now. So the number of existing home sales in April was 4 million at a seasonally adjusted annualized rate, which means that if sales continued at this pace for a year, 4 million homes would sell in that year.

And that's down from a norm of five to five and a half million before the pandemic. And then in the early years of the pandemic, it soared up to six million. And so seeing existing home sales now hovering at four million shows that just the number of transactions is way down. And yesterday, the National Association of Realtors released data on April's existing home sales. What does that data tell us about where the housing market is heading as we go into the summer?

So the data really shows that this spring has gotten off to a slow start. The number of existing home sales fell in March and fell again in April. And that's on a seasonally adjusted basis.

But it does indicate that buyers are hesitant right now. They're still on the sidelines and we're seeing the inventory rise, but we're not seeing sales rise with it, which means that even though buyers have more to choose from, it's really that affordability, those mortgage rates and home prices that are hard to swallow. And so really without a change in mortgage rates, economists think it's unlikely that the market will pick up again.

in the coming months. So really, all eyes are on mortgage rates. And we have seen mortgage rates are tied to treasury yields, and we have seen treasury yields rising in recent days. And so that could indicate mortgage rates going up as well, which probably means that the market isn't going to kind of break out of this rut in the next couple of months, at least.

What obstacles are buyers and sellers facing right now? The affordability is the biggest obstacle that it is a hard time to afford to buy a home right now. Home prices soared during the pandemic and they're up a lot from just a few years ago. And mortgage rates are more than double where they were in 2021. And then on top of that, there's economic uncertainty. And when people don't feel stable, they don't feel confident about their jobs.

they're not going to go make a huge purchase like buying a home.

And then you have sellers who maybe want to upgrade to a bigger home or move down to a smaller home. But on their current home, they have a low mortgage rate. And so again, the affordability to get rid of that low mortgage rate by selling and then take on a much higher rate to buy that next home, a lot of people are saying, I wish I could move, but it just doesn't make sense right now. It doesn't pencil out. So I'm going to stay put and hold on to that low rate. Mm-hmm.

And I know we're talking more broadly across the country, but geography also plays a big role in the types of homes you see on the market and the prices.

Where are high prices still such a big factor impacting the market? So there's a lot of variation right now around the country. And so we are still seeing prices rising the fastest in the northeast and the Midwest. And that's because the supply of homes for sale in those regions is still low. It's still lower than it was before the pandemic. Whereas we're now seeing in the south, the southeast, southwest and across the west,

Inventory has been going up and it's actually above pre-pandemic levels. And so especially in the South, in Texas and Florida, we're seeing a lot more inventory on the market. Buyers suddenly have a ton of options. And so prices are coming down in those markets. We are seeing prices declining from a year ago.

But remember, they're coming down from really high levels. And so maybe we're seeing prices falling in some of these markets a couple percentage points from a year ago, but they've maybe risen 50% in the past five or six years. Did we have higher expectations for this home buying season?

I think coming into 2025, there were definitely some hopes in the real estate industry that this would be a better year. And so far, it has not happened. Mortgage rates have not come down this year. And in fact, there's now renewed concerns about inflation because of the tariff policies that have been announced. And so far, it has not happened.

And so people who were expecting that this would be an easier year for buyers are now saying, well, actually, we're having to revise some of our projections. We don't think that home sales are going to rise as much this year as we initially hoped. Nicole, we recently had you on the show for a three-part series on the housing market, which is linked in our show notes.

In it, you explained why we even call it a spring housing market, which I thought was so interesting. It has to do with the school year, right? Yeah.

So that's a big part of it. Yeah, that a lot of home buyers are families, people with kids who are in school, and people want to move between school years. So a lot of people want to start that process, buy a home in the spring so that the sale closes and they can move over the summer and then be set up in their new home by the fall. And also because there's this cycle in which demand rises in the spring,

that's also the expectation. And so a lot of sellers wait to list their homes until the spring because they know that's when the buyers will be out. So the idea of a spring housing market also becomes a bit of a self-perpetuating process where the expectation that it will be busy makes it busier. But definitely the spring is crucial for the real estate industry. And if

The market is slow this spring. It can be hard for home sales to recover in the fall. And so it really sets the tone for what we might expect for the whole year. That's WSJ reporter Nicole Friedman. And that's it for your Money Briefing. To hear more from Nicole, check out our series Buying a Home in 2025, Navigating the Crunch. It's linked in our show notes.

Tomorrow, we'll have our weekly markets wrap up, What's News in Markets. And then we'll be off on Monday for the Memorial Day holiday. But we'll be back on Tuesday with a new episode. I'm your host, Ariana Aspuru. This episode was produced by me. Jessica Fenton and Michael LaValle wrote our theme music. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer.

Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. Thanks for listening.

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