U.S. home prices were basically flat in March compared with February but were up 4.7% compared with March 2024, according to Clear Capital’s latest home price index report.
Regionally, and month-over-month, the report shows that home prices increased 0.2% in the Northeast, 0.2% in the Midwest, and 0.3% in the West, but were down 0.3% in the South.
Major cities that saw the largest annual home price gains in March included Richmond, Va., which saw a 7% year over year gain, followed by San Jose, Calif., with a 6.5% annual gain and Cincinnati. Ohio, with 7.6% gain.
This month’s report offers an analysis of how tariffs might impact home prices.
Citing estimates from the National Association of Home Builders, tariffs could increase the cost of a new home by around $9,200, according to the report.
However, Clear Capital notes that “we are in the early days of determining the impact tariffs will have on the economy.”
“The economic effects of these tariffs will be highly dependent on how our trading partners react,” the firm says. “Despite Jerome Powell’s comments that tariffs might be inflationary, the Fed Funds futures have increased their forecast from 3 to 4 rate cuts this year. If the stock market decline gets materially worse, the Fed will be under intense pressure to cut rates. Monetary policy is still restrictive, and the Fed will want to get to a neutral posture at a minimum.”
“Given the median new home price is $414,800, the tariff impact will be something like 2.2 percent,” the firm adds. “A 2.2 percent increase in the average monthly payment is probably not going to shift sentiment all that much, and if mortgage rates fall below 6.4 percent, the whole thing is a wash.”
“Bottom line: Provided the price impact on new home construction is in line with the NAHB estimates and mortgage rates don’t rise from here, the tariff impact on housing will be negligible,” the firm says.
Photo: Alexander Andrews