Tariffs Destroyed the Spring Housing Market

Tariffs threw a wrench into the 2025 spring housing market. Buyers were hesitant, sellers were uncertain, and mortgage rates were on a roller coaster. This is what I saw in mid April 2025.

At the time I recorded, who knew what would happen by the time the video came out. But whether the tariffs go through or get paused, stirring things up affects people who want to enter the housing market. We will not see for a while how tariffs change the grocery aisle or the cost of materials for building homes. What I could tell you for certain is that we were seeing volatility in the financial markets that we had not seen in years. In early April, rates dropped sharply in a matter of days and then jumped right back. By the end of the following week, most lenders were a little over 7%, after being in the mid 6s a couple of weeks before.

Spring is usually one of the busiest times in housing, and the effect was that sellers became uncertain and buyers hesitant. That does not mean home prices will not go up this year. It is very likely they will. It also does not mean it is a bad time to buy. I think what most people hoped for after the election was some certainty heading into spring and summer, and that simply was not the case.

The other thing I wanted to point out is how different regions behave. In Florida, we were seeing price declines in many counties. I had a client the week before who got an offer accepted $50,000 below asking, and I saw similar trends in Texas. In California, where I live and do most of my business, it was not the same story. We were seeing multiple offers again in most areas, and the hotter markets were Sacramento, the Bay Area and Southern California, where they had the fires and a shortage of inventory. Over the last ten years I have watched many people leave California for Idaho, Tennessee, Florida and Texas. California values stayed stable while some areas with a mass influx of new residents saw lots of inventory and some even saw values come down. I know of one area, which I will not name, that declined over 20% in 24 months. If you are thinking of moving to another state, note those areas.

On rates, I had good news and bad news. The good news is that we thought interest rates would continue to decline through 2025, and April's inflation numbers showed a meaningful decline that should matter once the tariff talk passes. The bad news is that I did not see home prices coming down that year. In many California markets we had finally reached a neutral market with more homes available, and some call that a buyer's market, but if a home was priced right in a popular area, it was still getting multiple offers. If rates fall even 1 or 2%, that will make a big difference in the payment, but lower rates also bring more buyers into the market, which increases demand and prices.

I try to share the facts and not take a side. If you are planning a move this year, a good first step is to know what you qualify for. Start with first-time buyer options or get your rate. MortgageOne is now licensed in 49 states.