Cover of the Residential Real Estate Market Snapshot report
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Overview: The Housing Market in March 2025

In February, the market was adjusting to recent economic changes. As inflation was still higher than the Federal Reserve’s target of 2%, the Federal Funds Rate remained unchanged since December 2024. Despite the price rise, consumer spending on goods and services continued to surge. Notably, a long-anticipated decrease in the Treasury yield was recorded in February, suggesting we may soon see more significant eductions in mortgage rates.

The housing market appears optimistic ahead of the busier spring months, with rising sales and increased contract-signing activity. Existing-home sales increased partly due to larger inventory, while pending home sales also saw a modest uptick. Mortgage rates have decreased for six consecutive weeks, reaching the lowest level in two months. Should the rates continue to decline, the mortgage lock-in effect will diminish, so more homes will become available, and demand will increase among potential homebuyers. However, residential construction must add more building permits to increase supply for the market to be more attractive to first-time homebuyers.

Consistent with the trend since January 2021, the U.S. labor market added more jobs in February despite a rising unemployment rate. These are potential signs of a loosening job market, with more job seekers than positions to fill. Nevertheless, this doesn’t necessarily spell bad news for homebuyers, as a weakening labor market could lead to lower interest rates.

Line graph: Existing-Home Sales, March 2016 to February 2025
Line graph: Pending Home Sales, March 2016 to February 2025

In February 2025, the upper limit of the Federal Funds Rate remained at 4.5%. Although the Federal Reserve began cutting the short-term rate in September of 2024, inflation rose above its target. Consequently, the Fed announced it would maintain a range of 4.25%-4.50% for the rate until inflation decreases.

Line graph: Interest Rates, March 2016 to February 2025

The U.S. labor market added 151,000 in February, close to the average monthly gain of 168,000 over the prior 12 months. Jobs were added mainly in the health care, financial, transportation and warehousing, and social assistance industries. Employment in the Federal government declined. In the construction industry, employment showed little change.

Line graph: Employment, March 2016 to February 2025

February's inventory of unsold listings was 1.24 million, up 5.1% from January and 17% from one year ago. The current unsold inventory is equivalent to a 3.5-month supply at the current sale pace, identical to January 2025 and up from 3.0 months in February 2024.

In February, privately-owned housing starts increased to a seasonally adjusted rate of 1.50 million. This increase is 11.2% above the revised January estimate but is 2.9% below the February 2024 rate.

Respectively, another measure of housing construction, building permits issued, decreased to 1.46 million in January. The decrease was 1.0% below the revised January rate and 6.7% below the February 2024 rate.

Line graph: Housing Starts, March 2016 to February 2025
Line graph: Building Permits, March 2016 to February 2025

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