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President Trump's reciprocal tariff policies adding to the already growing economic uncertainty in the US. Right as we're entering the spring home buying season, how could this affect the real estate market? Joining me now, Danielle Hale, realtor.com chief economist. Um, Danielle, in your latest report, you're already seeing buyers on the sidelines. So what is this current uncertainty, the vibe around the tariffs, etc. What is this going to do now to sentiment?

It does seem like it's not likely to be much help and already, as you noted, our report showed that while sellers are enthusiastic and joining the market today at higher numbers than they were last year, buyers are showing some signs of hesitation. So we saw pending home sales, which is an early stage indicator for an actual home sale closing, uh, fall in the month of March compared to one year ago. Uh, we know that buyers are contending with higher prices still, even though listing prices were flat, uh, sales prices have continued to tick up. Mortgage rates remain relatively high, though that may change, uh, as some of this uncertainty hits the financial markets. Uh, but, but buyers are looking at high costs and then broader economic uncertainty. There are several surveys, uh, consumer confidence, consumer sentiment, uh, the home purchase sentiment index have all shown that buyers are expressing growing concerns about their personal financial situation and when they're making a commitment to a home purchase, which is the largest purchase people make and which is often financed over 30 years, uh, when that confidence is undermined, it really leads to some hesitancy, which we're already picking up on in the housing market.

Okay, so let's talk about the effect of that. You've got rising inventory, although still below pre-pandemic levels. You've got buyer hesitancy. I would think that this would result in price cuts for some of these homes being offered. Is that, are we starting to see that?

We are starting to see an uptick in price cuts. So it's worth noting that in any market conditions, there's always some sellers that are having to adjust their prices because they don't quite get the number right the first time they go to list a home. Uh, so we saw that, uh, price reductions were 17 and a half percent of the homes that were on the market had some sort of price reduction. And that is up compared to a year ago, somewhat modestly, but it does show that sellers are responding to some of that buyer sluggishness and and hesitancy in the market. So that does put buyers in a somewhat better bargaining position. It's also worth looking at the overall price trend. So as I noted, home prices were flat compared to a year ago. We're not seeing the same increases that we had seen previously, but they've been in kind of this holding pattern, uh, on asking prices for the better part of the last year or so. But sales prices have continued to tick up and some of that is due to more activity at the higher end on sales and more activity on the lower end for listings. So, uh, it's good news for buyers who are looking for those entry-level price points, but it does suggest that they're having trouble getting to the closing table in those lower price points.

And how much relief are, um, buyers getting from mortgage rates at this point? And do you expect, I mean we've we've been seeing, for example, today, the 10-year yield is down a lot. Um, so I don't know what you're expecting in terms of further relief on the mortgage front.

Yeah, so the mortgage rates are starting, are starting to react to that tariff news. So I do expect them to move lower. Uh, before this news they'd been hovering in the 6.6 to 6.7% range, which is better than the 7% that they had seen in January, uh, but certainly still up relative to 6%, 6.1% that we had in September. So mortgage rates are kind of in the middle. I do think we're likely to see them move lower, which will be a relief for buyers, but it's, it's juxtaposed against this uncertainty for the broader economy and especially in the labor market that might not necessarily yield the results that we would normally expect lower mortgage rates to see because of that uncertainty.

And Danielle, finally, um, is there any particular regional trend that you're keeping an eye on where you're seeing perhaps surprising strength or weakness amidst all of these bigger cross currents?

Yeah, a lot of the regional trends that we see are motivated by building and the ability of builders to sort of create more housing for the market. If we take a step back and look at the big picture, the US housing market is undersupplied, but is definitely not spread evenly across the country. Builders have done a better job of building in the south, to a lesser extent in the west. The northeast and the Midwest lag behind. So as a result, we're seeing more price softness in the south, uh, and more inventory availability. In fact, some markets in the US, particularly in central Texas, are back above pre-pandemic levels of inventory. Uh, so buyers in the south are in a somewhat better position. Buyers in the northeast and the Midwest may in fact still be seeing price increases.

Danielle, thank you so much. Good to see you.

Thanks for having me.