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Existing home sales rose 9.5% in February from January to 4.38 million units, on a seasonally adjusted annual basis, according to the National Association of Realtors. Housing analysts had expected a slight decline.
Sales were down 3.3% year-over-year, but it was the largest monthly increase since February 2023. Sales rose more in the West, up 19.4%, and the South, up 16.4%. Sales in the Northeast were unchanged.
“The additional housing supply helps meet market demand,” said Lawrence Yun, chief economist at NAR. “Demand for housing has been steadily rising due to population and job growth, although the actual timing of purchase will be determined by prevailing mortgage rates and broader inventory options.”
Inventory rose 10.3% year over year to 1.07 million homes for sale at the end of February. This represents a low 2.9-month supply at the current sales pace.
High demand continued to push the average price higher, up 5.7% from a year earlier to $384,500 — the eighth straight month of year-over-year gains. Competition was intense, with 20% of homes selling at above list price.
The number of sales depends on closings, so contracts will likely be signed in December and January, when the 30-year fixed mortgage rate has dropped to the mid-6% range. It's now topped 7%, according to Mortgage News Daily.
However, first-time buyers did not increase with overall sales. They represented just 26% of buyers in February, down from 28% in January. Nearly 40% is the historical norm. The percentage of cash sales reached 33%, compared to 28% in the previous year.
“The stock market, that might be helpful, or record-high home prices. People from expensive states like California are moving to more affordable markets like Florida or Georgia and paying all in cash,” Yoon said, adding that consumers might accept another option. The “new normal” for mortgage rates.
