A brief drop in mortgage rates and a pullback in home prices boosted existing home sales in February, according to the National Association of Realtors (NAR). The 30-year mortgage rates averaged less than 6.3% in February per Freddie Mac and the median sales price in February posted the first decline since February 2012. The monthly increase in sales ended a 12-month streak of declines.
Total existing home sales, including single-family homes, townhomes, condominiums and co-ops, rose 14.5% to a seasonally adjusted annual rate of 4.58 million in February, the largest monthly gain since July 2020. On a year-over-year basis, sales were still 22.6% lower than a year ago.
The first-time buyer share fell to 27% in February, down from 31% last month and 29% in February 2022. The weakening of the first-time buyer share is a reminder of the pricing out the market has experienced. The February inventory level measure stayed at 0.98 million units but was up 0.85 million from a year ago.
At the current sales rate, February unsold inventory sits at a 2.6-months’ supply, down from 2.9 last month but up from a 1.7-months reading a year ago. This inventory level remains very low, compared to balanced market conditions (4.5 to 6 months’ supply), and illustrates the long-run need for more home construction.
Homes stayed on the market for an average of 34 days in February, up from 33 days in January and 18 days in February 2022. In February, 57% of homes sold were on the market for less than a month.
The February all-cash sales share was 28% of transactions, down from 29% last month but up from 25% a year ago. All-cash buyers are less affected by changes in interest rates.
The February median sales price of all existing homes was $363,000, down 0.2% from a year ago, ending a streak of 131 consecutive month of year-over-year increases, the longest-running streak on record. The median existing condominium/co-op price of $321,000 in February was up 2.5% from a year ago.
Geographically, all four regions saw an increase in existing home sales in February, ranging from 4.0% in the Northeast to 19.4% in the West. However, on a year-over-year basis, all four regions continued to see a double-digit decline in sales, ranging from 18.7% in the Midwest to 28.3% in the West.
The Pending Home Sales Index (PHSI) is a forward-looking indicator based on signed contracts. The PHSI rose 8.1% from 76.3 to 82.5 in January. However, on a year-over-year basis, pending sales were 24.1% lower than a year ago per the NAR data.
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