Existing home sales in February showed a slight increase, rising 1.7% from January to an annualized rate of 4.09 million units, as reported by the National Association of Realtors. However, this represents a 1.4% decline compared to February of the previous year. The increase in sales for February reflects deals likely made in December and January, when mortgage rates were relatively low at around 6% for a 30-year fixed mortgage. This rate was nearly one percentage point higher a year ago.
Despite the modest rise in sales, the overall demand for housing remains weak in comparison to recent wage growth and job increases. Lawrence Yun, chief economist for the Realtors, indicated that while wage growth currently exceeds home price growth by nearly four percentage points, annual home sales have decreased by 1 million compared to 2019, despite 6 million more jobs being available.
While lower mortgage rates have improved affordability somewhat, inventory levels remain a challenge, with 1.29 million homes available at the end of February. This marks a 2.4% increase from January and a 4.9% increase from February of the previous year, resulting in a supply of 3.8 months at the current sales pace. A balanced market typically has a six-month supply. Notably, nearly 45,000 homes that were delisted last fall have been relisted—the highest January figure for this statistic in a decade.
Home prices continue to remain slightly elevated, with a median price of $398,000 in February, reflecting a year-over-year increase of 0.3%. The market remains particularly active for higher-end properties, while sales at lower price points have significantly declined. First-time buyers accounted for 34% of sales, up from 31% the previous year.
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