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Existing home sales surged 9.5% in February from January to 4.38 million units on a seasonally adjusted annualized basis, according to the National Association of Realtors. Housing analysts had expected prices to fall slightly.
Sales fell 3.3% year-on-year, but were the largest monthly gains since February 2023. The largest sales growth was in the western region, with a growth of 19.4%, and the southern region with a growth of 16.4%. Sales in the Northeast region were unchanged.
“Additional housing supply is helping to meet market demand,” said NAR Chief Economist Lawrence Yun. “Demand for housing has been growing steadily due to population and job growth, although the actual timing of purchases will depend on prevailing mortgage rates and the broader Inventory selection.”
The inventory of homes for sale at the end of February increased by 10.3% year-on-year to 1.07 million units. At the current sales pace, a 2.9-month supply is still low.
Increased demand continued to push the mid-range price up 5.7% from the previous year to $384,500, marking the eighth consecutive month of annual gains. Competition is fierce, with 20% of homes selling for more than list price.
Sales numbers are based on volume, so contracts are likely to be signed in December and January, when 30-year fixed mortgage rates drop to the mid-6% range. According to statistics, this proportion currently exceeds 7% Mortgage News Daily.
However, the surge in first-time homebuyers has not coincided with overall sales growth. In February, they accounted for only 26% of buyers, down from 28% in January. About 40% is the historical norm. All-cash sales accounted for 33%, up from 28% the year before.
“The stock market, or record high housing prices, may be helpful. People from expensive states like California will go to more affordable markets like Florida or Georgia and pay all cash,” Yun said, adding , consumers may accept the “new normal” in mortgage rates.
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