April 2025 Housing Market Update: Trends and Challenges
New Home Inventory Increases, Prices Face Pressure
The housing market is showing encouraging signs for potential homebuyers, as the inventory of new homes available for sale has risen significantly. The latest figures reveal that there are now approximately 500,000 new homes on the market, marking a 7.8% year-over-year increase. Despite this positive trend, the median sales price has decreased to $414,500, reflecting a 3.1% drop since January, though it still shows a 1.5% increase compared to the previous year.
Challenges Persist for Home Shoppers
While the increase in inventory is a welcome development, it may not be enough to offset ongoing challenges in the market. Mortgage rates, although having dropped recently, continue to pose a significant hurdle for many prospective buyers. Overall, inventory levels remain limited, leading to a competitive market for both new and existing homes.
A Steady Market for New Home Sales
According to Buddy Hughes, chairman of the National Association of Home Builders (NAHB), “New home sales have been roughly flat thus far in 2025, as ongoing limited inventory of existing homes in many markets continues to support the need for new homes.” This stability in new home sales reflects the persistent demand driven by the scarcity of existing homes.
Existing Home Sales Show Slight Improvement
In conjunction with trends in new home sales, the National Association of Realtors (NAR) reported a seasonal adjustment showing existing home sales at an annualized rate of 4.26 million. This figure represents a 4.2% increase from January, although it is down by 1.2% from the previous year.
Impact of Tariffs on the Housing Market
Concerns loom over potential tariffs that could affect building material costs. President Donald Trump has proposed various tariffs, including a 25% duty on steel and aluminum, with discussions around increasing that to 50%. Additionally, he has suggested reciprocal tariffs on Canadian lumber, which could further complicate pricing for builders.
April 2: A Critical Date for Builders
April 2 marks an important deadline for homebuilders due to a one-month pause on tariffs involving Mexico and Canada. If these tariffs are reinstated, builders may face a significant increase in construction costs. The looming global reciprocal tariffs, due to take effect on the same day, could also disrupt the market tremendously, matching tariffs that other nations impose on American exports.
Builder Confidence Under Pressure
Recent data shows a decline in builder confidence, with the NAHB/Wells Fargo Housing Market Index reflecting a six-point drop in February and March. Builders are reportedly adjusting their pricing models, anticipating an increase of $7,500 to $10,000 in construction costs due to these tariff uncertainties.
Looking Ahead: Construction Trends
As the housing market evolves, the pace of new home construction is a critical factor to monitor. While increasing inventory signals a response to declining buyer demand, some builders are scaling back on new constructions as they evaluate the potential impacts of tariffs and immigration policies. Lisa Sturtevant, chief economist at Bright MLS, noted, “Right now, new home inventory is rising because there are fewer buyers and homes that were started last year are sitting vacant.”
