U.S. home price growth slowed to a crawl in March, rising just 1.7% year over year — the most sluggish pace in more than a decade — while a surge in contract cancellations highlighted a housing market increasingly chilled by high home prices and geopolitical uncertainty.
Almost 53,000 home purchase agreements, representing 13.4% of all home sales under contract, fell through in March, up from 12.5% a year earlier, according to a Redfin analysis published Wednesday.
This rise in buyer walkways occurred alongside the slowest annual home price growth recorded by Redfin since 2012. On a month-over-month basis, home prices inched up a mere 0.1% for the third consecutive month, according to the Redfin Home Price Index.
The dual trend of fading price gains and rising cancellations is being driven by a combination of housing unaffordability and a sudden spike in borrowing expenses. Mortgage rates jumped from 6% to 6.4% in March, Redfin noted, a move the brokerage firm’s analysts largely attributed to oil price spikes and market turmoil stemming from the ongoing war against Iran.
“Price growth is losing steam, with the slowest annual gains we’ve seen in a decade — in line with our expectations for the year,” said Chen Zhao, Redfin’s head of economics research, in the firm’s home price growth data report, published Tuesday.
Despite tepid buyer demand that pushed 13 major metropolitan areas into month-over-month price declines — led by the Texas cities of Fort Worth (-0.8%) and Austin (-0.7%) — a widespread drop in new seller listings has kept national prices from falling entirely. There are still hundreds of thousands more sellers than buyers, but many homeowners are opting to stay put rather than test a softening market.
“While that can be frustrating for homeowners hoping to sell, it’s the start of a reset for the housing market as a whole, and may ultimately bring homebuying costs down enough to bring some house hunters back,” Zhao added.
The Redfin analysis of cancellations, based on multiple listing service pending-sales data, reveals a deeply fractured U.S. market. Buyers are most easily abandoning deals in saturated Sun Belt buyer’s markets. San Antonio and Orlando, Fla., led the nation in cancellations, with 18.7% and 18.1% of pending sales falling through, respectively.
San Antonio also posted the largest year-over-year price decline, with prices falling 4.1%, followed by a 3.5% dip in Jacksonville, Fla., and a 3% decline in Austin.
However, localized demand continues to drive up costs in specific tech-heavy regions. San Francisco posted a massive 13% year-over-year price surge, which analysts attributed largely to the region’s ongoing AI boom, making it the highest-appreciating market in the country, followed by Chicago (10.7%) and New York (9.2%).
“Buyers are getting cold feet,” said Patricia Ammann, a Redfin Premier agent in Arlington, Va., in the brokerage firm’s analysis of cancellations. “There have been layoffs, ups and downs in the market and geopolitical turmoil — and on top of all that, housing costs are still high.”
