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Existing home sales rose 9.5% in February from January to 4.38 million units, on a seasonally adjusted annualized basis, according to the National Association of Realtors. Real estate analysts expected a slight drop.
Sales fell 3.3% year-over-year, but it was the largest monthly gain since February 2023. Sales rose the most in the West, by 19.4%, and in the South, by 16.4%. Sales in the Northeast were unchanged.
“The additional housing supply is helping to meet market demand,” said Lawrence Yun, NAR chief economist. “Demand for housing has steadily increased due to population and employment growth, although the actual timing of purchases will be determined by prevailing mortgage rates and a greater variety of inventory.”
Inventory increased 10.3% year over year to 1.07 million homes for sale at the end of February. This represents a still low supply for 2.9 months at the current sales rate.
Increased demand continued to push the average price up 5.7% from a year earlier to $384,500, the eighth consecutive month of annual gains. Competition was tough: 20% of homes sold above the list price.
The sales count is based on closings, so contracts were likely signed in December and January, when the 30-year fixed mortgage rate fell to the mid-6% range. It is now over 7%, according to Mortgage News Daily.
However, first-time buyers did not increase with overall sales. They represented only 26% of buyers in February, down from 28% in January. About 40% is the historical norm. All-cash sales reached 33%, up from 28% the previous year.
“The stock market, maybe that's helping, or record home prices. People from expensive states like California are going to more affordable markets like Florida or Georgia and paying for everything in cash,” Yun said, adding that Consumers may be accepting a “new normal” for mortgage rates.
