Existing home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020, according to a recent survey by the National Association of Realtors. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.
Total existing home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said Lawrence Yun, NAR’s chief economist. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.
“Inventory levels are still at historic lows,” Yun added. “Consequently, multiple offers are returning on a good number of properties.”
The median existing-home price for all housing types in January was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West. This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.
Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022. Fifty-seven percent of homes sold in February were on the market for less than a month.
“While large swings in mortgage rates continue to challenge potential buyers and potential sellers, spring home buying season started early this year with motivated buyers wanting to take advantage of even the smallest improvements in housing affordability,” said Zillow senior economist Orphe Divounguy. “There are fewer home buyers than there were in the past two years, but the lack of inventory means buyers are still facing stiff competition.”
First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022. NAR’s 2022 Profile of Home Buyers and Sellers – released in November 2022 – found that the annual share of first-time buyers was 26%, the lowest since NAR began tracking the data.
All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in February, up from 16% in January but down from 19% in February 2022.
“February’s numbers prove the mounting pent-up demand for home buying,” said Robert Frick, corporate economist at Navy Federal Credit Union. “A temporary drop in mortgage rates and falling prices in some markets drove sales higher for the first time in a year and by a number that beat forecasts. As important as this is, that the median price of a US home fell from a year ago is the strongest green shoot in an otherwise dismal housing market. Prices need to drop more, and across more markets, before a general revival can occur, and this report shows that trend has begun.”
Distressed sales – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.60% as of March 16. That’s down from 6.73% from the previous week but up from 4.16% one year ago.
Single-family and condo/co-op sales
Single-family home sales soared to a seasonally adjusted annual rate of 4.14 million in February, up 15.3% from 3.59 million in January but down 21.4% from the previous year. The median existing single-family home price was $367,500 in February, down 0.7% from February 2022.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 440,000 units in February, up from 410,000 in January but down 32.3% from one year ago. The median existing condo price was $321,000 in February, an annual increase of 2.5%.
“Owning a home provides a path to long-term financial security and is a vehicle by which to transfer wealth to future generations,” said NAR president Kenny Parcell, a Realtor from Spanish Fork, Utah and broker-owner of Equity Real Estate Utah. “Realtors deliver expert guidance, objectivity and professionalism to consumers during the complex process of purchasing a home.”
Existing home sales in the Northeast improved 4% from January to an annual rate of 520,000 in February, down 25.7% from February 2022. The median price in the Northeast was $366,100, down 4.5% from the previous year.
In the Midwest, existing home sales grew 13.5% from the previous month to an annual rate of 1.09 million in February, declining 18.7% from one year ago. The median price in the Midwest was $261,200, up 5.0% from February 2022.
Existing home sales in the South rebounded 15.9% in February from January to an annual rate of 2.11 million, a 21.3% decrease from the prior year. The median price in the South was $342,000, an increase of 2.7% from one year ago.
In the West, existing home sales rocketed 19.4% in February from the prior month to an annual rate of 860,000, down 28.3% from the previous year. The median price in the West was $541,100, down 5.6% from February 2022.
“Most of these February closings were the consummation of offers that were accepted in December and January,” said Holden Lewis, home and mortgage expert for NerdWallet. “Home buyers got a breather in those two months because mortgage rates dipped about half a percentage point compared to rates in the fall. Rates have risen since then, and home sales are likely to slow again in the next few months.”