By Nicole Friedman and Gina Heeb

Mortgage rates usually fall during periods of economic uncertainty. But during the past tumultuous week for the markets, mortgage rates ended essentially flat and dealt another blow to the housing market's crucial spring selling season.

The average rate on the standard 30-year fixed mortgage dipped slightly to 6.62% this week, according to a survey of lenders by mortgage-finance giant Freddie Mac. It was 6.64% a week earlier.

Other news around tariffs and their impact on the economy didn't help. Economic anxiety and extreme stock market volatility are emerging as destabilizing threats to a housing market that can't catch a break.

Some buyers recently started tiptoeing back into the market, helped by a decline in mortgage rates after two consecutive years of anemic sales. Home showings for the week ended April 6 were up 39% from early in the year, outpacing the increase over the same period last year, according to ShowingTime+, a Zillow Group subsidiary.

But President Trump's announcement of across the board tariffs last week sent stocks reeling and led economists to raise the odds for a recession. Even after Trump on Wednesday authorized a three-month pause on tariffs for most countries and stocks rebounded, financial markets are jittery and companies remain confused about what comes next.

Mounting uncertainty is expected to make potential home buyers rethink their decisions. Americans tend to postpone major purchases when they are concerned about a slumping economy, fear that their jobs may be at risk or worry their investments will evaporate if there are stock market losses.

During typical stock market selloffs and when economic fears are rising, bond yields tend to fall as investors seek out the safe haven of the U.S. Treasury market. Yields on Treasurys fall when bond prices rise.

While that happened initially last week, other factors caused bond yields to reverse and move higher. Mortgage rates ended the week without much change.

"Even if we do see some relief in rates, it's not clear to me this is going to translate to demand in the housing market," said Chen Zhao, economics research lead at Redfin.

If buyers sit out the spring -- typically the busiest time of year -- that could put 2025 on track for the third straight year of home sales near multidecade lows. Pending home sales in February declined 3.6% from the same month in 2024, which went on to be the weakest year for home sales since 1995, according to the National Association of Realtors.

Softer buyer demand would put downward pressure on home prices. Prices are already falling in some markets in the Southeast and Southwest, but they remain near record highs in most of the U.S. If the economy were to enter a recession and many Americans lost their jobs, that could lead to more widespread price declines.

Corners of the housing market with lots of new inventory and more homes listed for sale look more vulnerable to price declines, according to Hannah Jones, senior economic research analyst for Realtor.com.

Some real-estate agents and bankers are already seeing clients pull back. Melissa Cohn, regional vice president at William Raveis Mortgage, said one client postponed a closing this week and another decided to pause house hunting.

"The tariffs have become the great unknown," she said.

Meredith Libbey and Corry Pelsor have been looking to buy a home, on and off, in the Portland, Maine, area since 2021. They made an offer on a home last month and lost out to a higher bidder. Now the tariffs have made them more concerned about the economy, and they are considering pausing their home search.

"I basically find myself kind of keeping an eye on things, but not feeling super-motivated to go see listings," Libbey said.

The yield on the 10-year Treasury note fell last week after the tariff announcement, as stocks lost trillions of dollars in market value. Some hoped that one bright spot in the selloff would be a dip in rates that could spur some home buying activity or refinancing.

It's a "good time to buy a house," John Augustine, chief investment officer at Huntington Private Bank, said last week when bond yields were falling.

But mortgage rates have been stuck between 6% and 7%. The Mortgage Bankers Association recently forecast that the average mortgage rate for the year would be around 6.5%.

The "hugely volatile time" in recent weeks has made that forecast much more uncertain than usual, according to chief economist Michael Fratantoni.

Even before the tariff announcement, consumer confidence was fading. About one-third of consumers surveyed by Fannie Mae in March said they are concerned about losing their job in the next 12 months, a record high in data going back to 2011. And just 22% of survey respondents said it was a good time to buy a home, down from nearly a quarter in February.

The housing market has been driven by luxury buyers in recent months. But those wealthy buyers could become rattled and pull back after the stock-market volatility in recent days.

About 16% of home buyers used financial assets such as stocks, bonds, cryptocurrency or retirement accounts as the source of their down payment, according to a 2024 survey from the National Association of Realtors.

The changes in trade policy could also hurt home builders because of higher material costs. Home-builder confidence fell in March to the lowest level in seven months, according to the National Association of Home Builders.

( News Corp, parent of The Wall Street Journal, operates Realtor.com.)

Write to Nicole Friedman at nicole.friedman@wsj.com and Gina Heeb at gina.heeb@wsj.com

(END) Dow Jones Newswires

April 10, 2025 12:00 ET (16:00 GMT)

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