The recent tariffs and stock market volatility cast shadows over the spring home shopping season. Recession fears and a sell-off in the stock market have eaten into the savings of many potential buyers, disrupting the real estate market. Los Angeles real estate agent Scott Price recently had a client back out of a home purchase just two days before closing.
The client cited economic uncertainty and potential company layoffs as the reason. While this is uncommon for Price, such deal cancellations are becoming more frequent across the U.S.
According to Redfin data, more than 14% of all home purchase agreements in the U.S. were canceled between March 17 and April 13. This is the highest level for this time of year since 2020, when the early days of the COVID-19 pandemic similarly froze the housing market.
Policy uncertainty, including President Donald Trump’s changing approach to tariffs, has worsened the instability. Economists warn that tariffs could lead to price increases on a wide range of goods and may even cause a recession. Real estate agents are already feeling the effects.
According to the National Association of Realtors, sales of previously owned homes dropped 5.9% in March, the weakest pace since 2009. The spring homebuying season was hoped to improve last year’s slow pace, but recession fears and market volatility are lowering those expectations.
Maddy Mixter, a realtor based in Tacoma, Washington, noted that first-time homebuyers are especially anxious about the instability. “People are kind of taking a step back or being really cautious in their moves in the real estate market,” she said.
Market volatility impacts homebuyers
Mortgage rates also play a significant role, as they track the benchmark 10-year Treasury yield. This yield spiked recently after Trump’s tariff announcements, resulting in higher mortgage rates and further complicating home affordability. “Every tenth of a point increase is a big deal,” Mixter emphasized.
Financial advisors recommend caution in this environment. If you have a short-term goal, like buying a home in the next few years, the money you need shouldn’t be fully invested in the stock market,” advised Douglas Boneparth of Bone Fide Wealth. Tariffs have introduced additional complications for homebuyers.
Matthew Bizzarro, a New York City and Westchester realtor, noted that tariffs on imported construction goods and appliances make buyers wary of purchasing fixer-upper homes. “Some buyers are concerned about renovation costs due to tariffs,” he said. Mixter added that many first-time homebuyers are now avoiding homes that need major renovations.
Starter homes usually need work, but buyers are looking for move-in-ready properties because of the current uncertainty,” she explained. “There are some exceptions, however. Certain older homeowners invest in real estate after cashing out their stock holdings amid market fluctuations, viewing it as a more stable investment.”
As these economic variables continue to overshadow the spring home shopping season, both buyers and sellers are left navigating a challenging landscape.
Image Credits: Photo by Jakub Żerdzicki on Unsplash
