This spring is supposed to be when the housing market finally begins to thaw out of its three-year-long deep freeze.
Ahead of the typical peak homebuying season in spring and early summer, the indicators look positive. For-sale inventory is rising, and affordability is improving in many parts of the country thanks to lower mortgage rates, solid wage growth, and slowing home price appreciation.
“All those things together seem to support strong demand fundamentals, meaning people would want to get in the market,” said Lisa Sturtevant, chief economist at Bright MLS.
But recent events have clouded that outlook. The war in Iran has stoked fresh fears about inflation and pushed mortgage rates back above 6%. And the latest employment report showed dramatic weakening in the labor market, with the US shedding 92,000 jobs in February.
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Sturtevant remains cautiously optimistic about spring, although she’s more worried than she was a few weeks ago.
“I do think all that’s kind of put into question now,” she said.
Even before the latest shocks, early indicators of how housing market activity has been trending this year have been mixed. Home sales plunged in January, and contract signings were also muted, though a cold wave that hit half the country may have played a role.
February is looking slightly better. Zillow data showed home sales were up 1.8% from a year earlier, likely helped by improving affordability from lower rates. Home price appreciation during that period was a modest 0.4%.
“It’s low and steady housing appreciation with flows of buyers and sellers,” said Zillow senior economist Orphe Divounguy. “The balance of power between buyers and sellers remains somewhat right down the middle.”
Last week, executives at Home Depot and Lowe’s voiced caution about the state of the market, sending those companies’ shares lower.
“Our customers also tell us they have concerns over general economic uncertainty, including inflation, growing job concerns, and higher financing costs,” Home Depot CFO Richard McPhail said on a call discussing the retailer’s fourth quarter earnings. “As we look ahead to fiscal 2026, we anticipate these pressures will persist, as we have not yet seen a catalyst for an inflection in housing activity.”
Real estate agents gearing up for spring are staying positive, especially after last year proved disappointing in much of the country. Last spring, mortgage rates nearing 7% and uncertainty over tariffs and layoffs scared off some buyers and sellers. The ones who stayed in the market often couldn’t agree on price, leading to a spike in deal cancellations and pulled listings.