Existing home sales retreated as expected in March, snapping a two-month run of gains.

That’s according to the last of this week’s macro data out of the US.

The 4.3% decline reported by the NAR on Thursday was basically consistent with expectations and underscored the notion that 2024’s creeping increase in mortgage rates, when coupled with near record-high home prices, might’ve tempered buyers’ seasonal joie de vivre.

I don’t know why I say “might’ve.” If you want to buy something but ultimately don’t, the constellation of explanations is pretty limited assuming you didn’t lose interest: Whatever it was you wanted ended up being too expensive. And on the off chance you haven’t noticed, real estate in developed economies is pretty damn expensive these days, both in terms of the sticker price and the cost to finance it.

March’s MoM decline on the NAR series was the largest since November of 2022.

Chief economist Lawrence Yun blamed rates for “stuck” sales. It’s not a lack of jobs, that’s for sure. “There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market,” he said.

Here’s the problem (and I’m going to abandon any pretense to politeness in order to make the point). If you have to finance something over 30 years to “afford” it, and even then the rate has to be low and, crucially, fixed, “afford” is a misnomer. The 30-year fixed-rate mortgage is an American artifice: A glorified rent-to-own plan.

Average people don’t “buy” homes. Banks buy homes, with assurances from GSEs. You rent yours from the bank. Over time, you become part owner, and eventually you own outright. But in the first instance, you don’t “buy” it. You agree to an absurdly long stream of payments. If property prices are rising inexorably and uninterrupted, the key determinant of whether you can afford the rent-to-own payments is the cost of the financing. That, in turn, means there’s a built-in limit to this charade, assuming wage growth doesn’t keep up with property price inflation: At a certain point, home prices will rise so much that even 2% or 1% mortgage rates won’t be enough to make the math work for a majority of new buyers. Game over.

Currently, buyers in the US (and across the developed world for that matter) are facing the worst of both worlds. Prices continue to scale new highs and financing costs are the highest they’ve been in decades. Wages are rising, but not by enough to offset the price increases, let alone the price increases plus seven-handle mortgage rates.

The persistence of “high” (with the scare quotes to denote that 7% actually isn’t all that high in a historical context and wouldn’t be unreasonable if fiber cement boxes didn’t cost half a million dollars) mortgage rates is also keeping resale supply off the market, propping up prices.

Mercifully, Thursday’s NAR release showed a near 5% increase in inventories for March from February. Months’ supply was 3.2, up from 2.7 in March of last year and the highest since November.

“More inventory is always welcomed in the current environment,” Yun remarked. That’s an understatement. The median existing home price hit a March record at $393,500.

“Frankly, it’s a great time to list ,” Yun went on. Sellers, he said, can expect “multiple offers on mid-priced properties and overall, home prices continu[e] to rise.” March’s 4.8% YoY gain was the ninth consecutive.

The data came on the heels of lackluster housing starts and an ambiguous read on builder sentiment. New construction benefited handsomely from the “golden handcuffs” dynamic that continues to keep the resale market under-supplied. But the persistence of high rates is an albatross on builder moods too: The longer rates stay high, the longer you have to offer incentives and what are incentives if you’re a builder? They’re a margin headwind. They’re corrosive to profitability. The money’s gotta come out of something, after all. If it’s the sales price, that’s a direct margin hit, if your financing arm has to eat the points, that’s lost spread somewhere, and on and on.

Anyway, readers know how I feel about this: The housing market’s broken. Everyone agrees on that, albeit for different reasons. At a very basic level, society won’t function if people are unable to obtain reasonably affordable, safe shelter. I’m not sure how much plainer that could be.