The Balancing Act: How Appraisers Can Navigate Supply Shortages, Interest Rates, and Tariffs 

Last month in The Full Measure, we discussed how the housing market was beginning to show early signs of a “spring thaw,” with improving sales activity and modest inventory growth, even as affordability challenges persisted. February data revealed a market slowly stirring after months of stagnation, signaling a pivotal moment in the post-pandemic evolution toward a more balanced, though still uneven, market. 

However, March data signals that the recovery is far from linear. According to the National Association of REALTORS®, existing-home sales fell 5.9% from February to a seasonally adjusted annual rate of 4.02 million, marking a 2.4% year-over-year decline. Sales decreased across all four major U.S. regions.  

Despite these declines, housing inventory rose to 1.33 million units, an 8.1% increase from February and a 19.8% rise compared to a year ago. The market now sits at a 4.0-month supply, up from 3.5 months in February. Prices remain resilient, with the median existing-home price increasing 2.7% year-over-year to $403,700. 

Building on that foundation, this month we continue to track key developments. Inventory is rising more noticeably, mortgage rates remain elevated, and tariffs are adding new cost pressures that appraisers must carefully consider when valuing properties. 

Supply and Demand: A Market Adjusting 

Housing supply has improved, with active listings up 12.3% year-over-year and new listings rising 11.2% (Redfin, April 2025). However, inventory levels still remain historically low relative to pre-pandemic standards. 

The major constraint remains the “lock-in effect.” Over 80% of current mortgage holders have rates far below today’s market rates, leaving them little incentive to sell.  

Demand has softened slightly. Pending home sales declined about 0.8% year-over-year by mid-April, and mortgage-purchase applications were down 5% week-over-week (Redfin, April 2025). Buyer caution is being driven by affordability pressures and broader economic uncertainty. 

Mortgage Rates: The Dominant Market Driver 

Interest rates continue to be the most important driver. As of mid-April, the 30-year fixed mortgage rate averaged 6.86% (Mortgage News Daily, April 2025). Weekly rates reported by Freddie Mac stood at 6.62% for the week ending April 10—the lowest level since mid-December 2024. 

While some forecasts suggest moderate easing later in 2025 (Mortgage Bankers Association, 2025), today’s rates are still high enough to dampen affordability and constrain both buyers and sellers. 

Tariffs: The Rising Cost of Construction 

Tariffs are putting upward pressure on construction costs. Builders report that tariffs have added approximately $10,900 to the cost of a typical new home (National Association of Home Builders, 2025).  

Canadian lumber faces a 14.5% tariff, and additional investigations could increase those duties later this year. Tariffs on a wide range of materials, including steel, aluminum, and stone tiles, have led to 10% % to 15% increases in renovation costs. 

Combined with stock-market volatility and recession concerns, these cost pressures are affecting builder activity and buyer sentiment. 

Home Values: Slowing Growth, Regional Divergences 

National home price growth is clearly losing steam. The median U.S. home-sale price rose 2.6% year-over-year during the four weeks ending April 13—down from 5%-6% growth seen at the end of 2024 (Redfin, April 2025). 

At the metro level, prices have declined year-over-year in 10 of the 50 largest U.S. metros, particularly in parts of Texas and Florida. 

The narrative is shifting from “prices up despite fewer sales” to “prices stabilizing, with some metro areas seeing declines.”  

Appraisers must now pay closer attention to regional and local price dynamics rather than relying on broad national trends. 

Sales Outlook: Cautious and Selective Buyers 

Despite ongoing challenges, there are some bright spots. Touring activity is up 39% from the beginning of the year, suggesting that buyer interest remains intact even if transaction volumes are subdued (Redfin, April 2025). 

However, buyers are increasingly selective. Only 25.8% of homes sold above asking price, down from 29% a year ago, and the average sale-to-list ratio declined to 98.7%. 

With high housing payments (median monthly payment hitting $2,819) and economic jitters from tariffs and market volatility, many buyers are hesitant—but motivated buyers, especially those with pressing needs, are active and willing to negotiate. 

What Appraisers Should Watch 

As the market evolves this spring and summer, appraisers should monitor these critical dynamics: 

• Inventory levels: Rising, but still modest compared to historical norms. 
• Mortgage rates: Stabilized but persistently high. 
• Tariffs: Increasing construction and renovation costs. 
• Home prices: Slowing nationally, with declines emerging in select metro areas. 
• Buyer behavior: Shifting toward caution, with greater negotiation and longer days on market. 

Understanding these nuanced trends will be essential for producing credible and defensible appraisals. The housing market is neither crashing nor booming—it is recalibrating. Appraisers who stay informed and adapt will be best positioned for success. 

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