NEW YORK — The U.S. stock market's sell-off cut deeper on Monday as Wall Street questioned how much pain President Donald Trump will let the economy endure through tariffs and other policies to get what he wants.
The S&P 500 dropped 2.7% to drag it close to 9% below its all-time high, which was set last month. At one point, the S&P 500 was down 3.6% and on track for its worst day since 2022. That's when the highest inflation in generations was shredding budgets and raising worries about a possible recession that ultimately never came.
The Dow Jones Industrial Average dropped 890 points, or 2.1%, after paring an earlier loss of more than 1,100, while the Nasdaq composite skidded by 4%.
The New York Stock Exchange is seen Feb. 26 in New York.
It was the worst day yet in a scary stretch where the S&P 500 has swung more than 1%, up or down, seven times in eight days because of Trump's on-and-off-again tariffs. The worry is that the whipsaw moves will either hurt the economy directly or create enough uncertainty to drive U.S. companies and consumers into an economy-freezing paralysis.
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The economy already gave some signals of weakening, mostly through surveys showing increased pessimism. A widely followed collection of real-time indicators compiled by the Federal Reserve Bank of Atlanta suggests the U.S. economy might already be shrinking.
Asked over the weekend whether he expected a recession in 2025, Trump told Fox News Channel: "I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing." He then added, "It takes a little time. It takes a little time."
Trump says he wants to bring manufacturing jobs back to the United States, among other reasons he's given for tariffs. His Treasury secretary, Scott Bessent, also said the economy may go through a "detox" period as it weans off an addiction to spending by the government.
People work on the options floor March 4 at the New York Stock Exchange in New York.
The U.S. job market is still showing stable hiring at the moment, and the economy ended last year running at a solid rate. But economists marked down their forecasts for how the economy will perform this year.
At Goldman Sachs, for example, David Mericle cut his estimate for U.S. economic growth to 1.7% from 2.2% for the end of 2025 over the year before, largely because tariffs look like they'll be bigger than he previously predicted.
He sees a one-in-five chance of a recession over the next year, raising it only slightly because "the White House has the option to pull back policy changes" if the risks to the economy "begin to look more serious."
"There are always multiple forces at work in the market, but right now, almost all of them are taking a back seat to tariffs," according to Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
Trump met Monday with tech industry CEOs, but the event was closed to the news media. He remained silent about the sell-off through the day.
A member of the Seattle Fire Department inspects a burned Tesla Cybertruck on Monday at a Tesla lot in Seattle.
The worries hitting Wall Street so far hurt some of its biggest stars the most. Big Tech stocks and companies that rode the artificial-intelligence frenzy in recent years slumped sharply.
Nvidia fell another 5.1% Monday to bring its loss for the year so far to more than 20%. It's a steep drop-off from its nearly 820% surge over 2023 and 2024.
Elon Musk's Tesla fell 15.4% to deepen its loss for 2025 to 45%. After getting an initial post-election bump on hopes that Musk's close relationship with Trump would help the electric-vehicle company, the stock slumped on worries that its brand has become intertwined with Musk.
Protests against the U.S. government's efforts to slash its workforce and other moves targeted Tesla dealerships, for example.
Stocks of companies that depend on U.S. households feeling good enough about their finances to spend also fell sharply. Cruise-ship operator Carnival dropped 7.6%, and United Airlines lost 6.3%.
It's not just stocks struggling. Investors sent prices lower for all kinds of investments whose momentum earlier seemed nearly impossible to stop at times, such as bitcoin. The cryptocurrency's value dropped below $80,000 from more than $106,000 in December.
Instead, investors bid up U.S. Treasury bonds as they look for things whose prices can hold up better when the economy is under pressure. That sent prices for Treasurys sharply higher, which in turn has sent down their yields.
The yield on the 10-year Treasury tumbled again to 4.22% from 4.32% late Friday. It's been dropping since January, when it approached 4.80%, as worries about the economy grew. That's a major move for the bond market.
All told, the S&P 500 fell 155.64 points to 5,614.56. The Dow Jones Industrial Average dropped 890.01 to 41,911.71, and the Nasdaq composite sank 727.90 to 17,468.32.
The Hottest Real Estate Markets of 2025
The Hottest Real Estate Markets of 2025
Photo Credit: Stuart Monk / Shutterstock
After a turbulent few years of price surges, rapid cooldowns, and fluctuating mortgage rates, the U.S. housing market is entering 2025 with a new set of dynamics. While 2023 was a relatively subdued year following the market frenzy of the pandemic era, 2024 saw signs of renewed momentum as buyers and sellers adapted to persistent affordability challenges.
Despite home prices remaining elevated in many regions, demand has rebounded in key markets, driven by factors such as improving wage growth, increased housing inventory, and some moderation in mortgage rates from their peak levels. However, affordability remains a major hurdle, especially for first-time buyers contending with high borrowing costs and limited supply in the entry-level segment. As we move into 2025, real estate activity is once again picking up, with certain metro areas emerging as particularly hot markets due to strong job growth, demographic shifts, and continued demand for housing.
Home Sale Price Changes Over Time
Despite a high mortgage interest rate environment, home sale prices are showing signs of growth
Source: Construction Coverage analysis of Redfin data | Image Credit: Construction Coverage
Home sale prices are rising again, even as high mortgage rates continue to challenge affordability. During the COVID-19 pandemic, home values soared, with year-over-year price growth peaking at 26.1% in May 2021 before gradually slowing. By late 2022, annual growth had fallen to just 1.0%, and by April 2023, prices had declined 4.1% from the previous year. However, the market has since rebounded, and at the end of 2024, home prices were 6.3% higher than the year prior—a pace more in line with historical norms.
Looking at the broader trend, home price growth has been cyclical over the past decade, with sharp surges during the pandemic followed by a market cooldown. While price growth is no longer as extreme, steady demand and limited inventory have kept values on an upward trajectory. Recent data suggests that even as affordability challenges persist, home prices continue to rise, albeit at a more sustainable rate.
Changes in Home Sales Volume
Year-over-year home sales growth is at its highest since June 2021
Source: Construction Coverage analysis of Redfin data | Image Credit: Construction Coverage
Similar to home prices, the trajectory of home sales has been a roller coaster in recent years. The COVID-19 pandemic initially brought transactions to a near standstill, with sales plummeting by more than a third from the spring of 2019 to the spring of 2020. When the market rebounded, sales surged, reaching a record 49.0% year-over-year increase in May 2021. However, as mortgage rates rose and affordability worsened, sales volume declined sharply, falling 35.1% year-over-year by December 2022.
Since early 2023, home sales have gradually recovered. Though still below pre-pandemic levels, sales were down just 7.1% year-over-year by the close of 2023, marking a significant improvement from the previous year’s steep declines. This momentum continued into 2024, and by December, sales were up 10.8% compared to the prior year—the strongest annual growth since mid-2021.
Geographical Differences in Market Conditions
States in the Northeast and California are home to some of the hottest real estate markets
Source: Construction Coverage analysis of Redfin data | Image Credit: Construction Coverage
Although the national real estate market is showing moderate signs of heating up, some regions are seeing significantly more activity than others. To examine these differences, researchers at , a website that provides construction software and insurance reviews, developed a composite score that ranks local real estate markets based on key indicators from Redfin, including:
- One-year change in median sale price (Dec 2023–Dec 2024)
- Share of homes that sold above asking (2024)
- Median number of days on the market (2024)
- Average sale-to-list percentage (2024)
- Share of listings with price drops (2024)
The Northeast and California dominate the rankings, with seven of the top 10 hottest states located in the Northeast. Connecticut leads the country with a composite score of 91.0, followed closely by New Jersey (87.8), Massachusetts (85.7), and Rhode Island (84.5). Despite its high cost of living, California ranks among the most active markets with a score of 73.9, and several of its northern metro areas—including San Jose, San Francisco, and Oakland—stand out as the hottest housing markets among large cities (those with populations over 350,000). One major factor driving demand in these areas is the difficulty of adding new housing supply. Densely populated cities in the Northeast and restrictive zoning laws in California have made it harder to build new homes, keeping supply tight and prices elevated.
By contrast, many Southern and Mountain West markets have cooled off. In 2021, Texas cities like Arlington, Fort Worth, and Austin ranked among the top 15 hottest markets. However, entering 2025, those same cities have dropped into the bottom 20 of the rankings. Similarly, Phoenix and Mesa, AZ, which were among the most in-demand real estate markets during the pandemic, now rank near the bottom. The rapid home price increases in these regions—combined with rising mortgage rates and return-to-office mandates—have made these once-popular migration destinations less attractive to buyers.
Below is a breakdown of real estate markets across the top and bottom cities and states. For a complete breakdown, see the full report: .
Cities With the Hottest Real Estate Markets
States With the Hottest Real Estate Markets
Methodology
Photo Credit: Stuart Monk / Shutterstock
The data used in this analysis is from Redfin’s . To determine the locations with the hottest real estate markets in 2025, researchers at Construction Coverage created a composite score, equally weighting the following metrics:
- One-year change in median sale price (Dec 2023–Dec 2024)
- Share of homes that sold above asking (2024)
- Median number of days on the market (2024)
- Average sale-to-list percentage (2024)
- Share of listings with price drops (2024)
In the event of a tie, the location with the greater one-year change in median sale price was ranked higher. Researchers also reported the median home sale price from December 2024. Cities were grouped into cohorts based on population size: small (less than 150,000), midsize (150,000–349,999), and large (350,000 or more). Note, locations with insufficient data were excluded for quality purposes.
For complete results, see on Construction Coverage.
