A Mixed Market

The U.S. housing market continues to face headwinds, with pending home sales in January down 5% compared to a year earlier. The primary culprits remain high mortgage rates and rising home prices, both of which have kept many would-be buyers on the sidelines.

Mortgage Rates and Treasury Yields

The national average mortgage rate for a 30-year fixed-rate loan currently stands at 6.65%, according to Freddie Mac. While this represents a slight decline from recent highs, it is still well above the 6% level seen in September. Meanwhile, 10-year Treasury yields have also eased, now at 4.28%, down from 4.36% last week and 4.53% a month ago.

Puget Sound Metro Home Prices: Bellevue Leads the Pack

Comparing median sale prices for 3-bedroom single family homes in select metro areas (excluding new construction, waterfront, and lot sizes greater than .5 acres), Bellevue tops the list at $1,440,000, followed by Seattle ($890,000), Everett ($650,000), and Tacoma ($460,000). The entire NWMLS shows an overall median price of $570,000 for these parameters.

Inventory and Sales Activity

Despite affordability challenges, inventory is increasing. At the end of February 2025, there were 10,448 active listings in the NWMLS, a healthy 39.4% jump from 7,495 a year earlier. Compared to January 2025, inventory was up by 207 listings, a modest 2% increase.

Closed sales also showed some resilience, rising 1.9% year-over-year. February 2025 saw 4,268 closed sales, up from 4,189 in February 2024. Month-over-month, the number of closed sales jumped by 14.5%, rebounding from January's 3,727 transactions. This increase in closings suggests that buyers are adjusting to current mortgage rates and market conditions, albeit cautiously.

Newly built homes, including condominiums, continue to play a significant role in the market, accounting for 14.2% of all MLS-tracked sales in 2024. This segment could become even more important as builders look to meet demand while navigating economic and policy uncertainties.

Trade Turbulence and Real Estate Implications

The broader economic landscape remains uncertain, particularly in light of President Trump’s recent tariff announcements. Over the past two weeks, the administration implemented a 25% tariff on all goods from Canada and Mexico, only to issue an exemption for the auto industry a day later, followed by additional carve-outs. Meanwhile, tariffs on Chinese imports have been raised to nearly 30%, and steel and aluminum imports now face a 25% tariff. In response, Canada and the EU have introduced retaliatory measures. Negotiations may yet materialize, but the drama has rattled markets as well as consumer and small business sentiment.

For the real estate sector, these trade policies introduce further uncertainty. The increased cost of commodities directly impacts construction expenses, potentially slowing down new developments. Supply chain disruptions could also complicate project timelines and drive up material costs. Additionally, uncertainty surrounding trade policy may weigh on capital expenditures and cross-border trade partnerships.