Tariff talk affects the housing market in April, as sales drop and prices reach a new record high

California’s critical spring home-buying season was cooler-than-expected in April, as would-be buyers were concerned about higher mortgage rates, a slowing economy and the uncertainty regarding tariffs.

Closed deals dipped to a seasonally adjusted annualized rate of 267,710 homes in April, a 3.4% decline compared to March and off 0.2% from a year ago, according to the California Association of Realtors. The annualized rate is how many homes would be sold if the current pace was maintained for a year – or about 22,300 during the month.

Home sales fell for the second consecutive month and remained below the 300,000 level – considered the mark for a semi-healthy market – for the 31^st straight month. The dismal performance will likely continue, as pending sales dropped for the fifth straight month largely prompted by higher mortgage rates.

A MIXED SPRING MESSAGE: ‘A SLUGGISH START’ BUT RECORD PRICES

Four of the several regional markets had sales gains in April compared to a year ago, including a 10.5% increase on the Central Coast, from Santa Barbara to Santa Cruz. But the state’s largest two markets, the Bay Area and Los Angeles, reported slides in sales and have a far-reaching effect on the statewide stats (see table, below).

“The housing market experienced a sluggish start to the spring buying season, as home purchase sentiment declined due to concerns over tariffs and a potential recession,” said CAR president Heather Ozur, a Palm Springs-area REALTOR. “With prices gradually increasing and mortgage rates remaining high, homebuyers are showing some hesitation amid the economic uncertainty. As trade negotiations between the U.S. and its trading partners continue, we hope to see more clarity once these trade deals are finalized.”

Amid the economic uncertainty and sluggish sales, the state’s median home price – meaning half the homes sold for more, the other half for less – increased to a record $910,160 in April, a 2.9% increase compared to March and up a scant 0.7% from a year ago. The annual price gain was the smallest since June 2023.

Six of the seven regions reported annual price gains, but only the 4.3% gain in the Far North – Chico to Crescent City – exceeded 1.2% Bay Area’s median home price dropped 1.7%.

AFFORDABILITY IS A CHALLENGE FOR MANY BUYERS WHILE SELLERS FACE MORE COMPETITION 

Annual home prices have increased for 22 consecutive months, good news for owners looking to sell, but an ongoing challenge for shoppers. Affordability is a huge issue for many home shoppers, with fewer than one of every seven households able to purchase the median priced home during the first quarter, according to the California Association of Realtors. The percentage is lower in parts of the Central Coast and Southern California.

“Despite reaching a new record, prices are moderating as the latest yearly growth pace slowed to its lowest level since mid-2023,” said Jordan Levine, CAR senior vice president and chief economist. 

An abundance of homes coming on the market could also affect home prices, as home shoppers enjoy more options. 

New active listings increased by double-digits for the fourth straight month, and the almost 11% month-to-month spike was the largest for March-April since 2019. As more homes come on the market, they are joining many others, with the most listings since October 2019.

The expanded listings could continue for some time, as jittery consumers hold off the major purchases amid the worry of a recession.

“Ongoing economic uncertainty has slightly dampened demand, while a steady increase in inventory has contributed to more moderate price growth this year.”