Home sales of pre-owned properties in the United States witness a steeper decrease than anticipated in March
# Firing Back at Trump's Tariffs: The Unyielding US Housing Market's Response
Now here's a hot take on that trade war business: Charles Payne, host of Making Money, tells us President Donald Trump's trade war ain't all it's cracked up to be. He reckons it's not about bombarding foreign nations, no siree, but rather it's about securing long-term prosperity for all us lovely Americans.
But let's not kid ourselves; Trump's tariffs are stirring up some real chaos in the housing market. Take them darn existing home sales for example. They took a nose dive in March, plummeting 5.9% to a pathetic 4.02 million units—a seasonally adjusted annual rate, of course. The National Association of Realtors said that in their minds, higher interest rates and worries about an economic slowdown, all thanks to those despised tariffs, are sucking the life out of demand.
To put it in context, the average rate on the popular 30-year fixed mortgage was fluttering around 7% in January and February. Needless to say, that's a steep climb by anyone's standards.
The Fed's Beige Book, if you're keeping up, revealed that tariff-induced price hikes and trade worries are weighing heavy on folks everywhere. And the housing market is definitely feeling the burn.
Government data from Wednesday showed that new home sales skyrocketed to a six-month high in March. However, the median price took a tumble as builders offered incentives to unload excess inventory—a condition that last surfaced during the peak of the global financial crisis back in late 2007.
"Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates," said Lawrence Yun, the NAR's chief economist.
And guess what? Uncertainty caused by our dear Leader's perennially shifting tariff policy and the duties he's slapped on varied imports, including lumber, is expected to drag the housing market down further. But fear not! Despite the gloomy predictions, economists claim that, so far, mass layoffs have been notably absent.
On the construction front, tariffs on imported materials such as Canadian lumber have sent costs soaring. According to the National Association of Home Builders (NAHB), approximately 10% of building materials in residential construction are imports.
Home builders, unsurprisingly, are making adjustments to their supply chains to cope with the increased costs, potentially gravitating towards domestically-produced goods. However, this shift might not immediately balance out the higher costs.
The surge in tariffs has introduced a considerable amount of uncertainty into the housing market, sparking concerns among realtors about the potential impact on home prices should construction costs keep rising. Moreover, experts fear that sustained economic uncertainty could cause mortgage rates to spike in the future.
In the face of these issues, affordability challenges may intensify and slow home sales growth as buyers grow increasingly cautious. Even as some markets, like the Research Triangle in North Carolina, continue to thrive thanks to demand for more affordable housing, overall growth could suffer.
It's a fine line Trump's walking, hoping to support U.S. manufacturing while sowing chaos in the housing market. Higher costs and market uncertainty loom large, jeopardizing home sales growth and affordability. So let's keep our fingers crossed that this trade war doesn't sink us any deeper.
- The housing market's response to President Donald Trump's tariffs has been far from positive, with existing home sales plummeting in March due to higher interest rates and economic slowdown concerns.
- The Federal Reserve's Beige Book revealed that tariff-induced price hikes and trade worries are affecting various sectors, including the housing market, which is feeling the burn.
- The surge in tariffs has led to increased costs for home builders, particularly in the case of imported materials such as Canadian lumber, which make up approximately 10% of building materials in residential construction.
- Economists predict that uncertainty caused by the perennially shifting tariff policy and the duties slapped on imports may drag the housing market down further, with potential implications for home prices and overall affordability.
