Following lackluster sales in December and January, existing-home sales rebounded in February, rising 11.8% month-over month, according to the National Association of Realtors (NAR).
However, existing-home sales were down 1.8% compared with February 2018.
Regionally, existing-home sales jumped 16.0% in the West, 14.9% in the South, and 9.5% in the Midwest, month-over-month. Sales were flat in the Northeast.
Housing market experts have been forecasting a strong spring home buying season and the increase in February indicates that the market is already picking up steam.
Not only have mortgage rates recently fallen to new lows for the year – and are expected to remain stable – there is pent-up demand from the slowdown that came in December and January. This slowdown was due mainly to market volatility which, in turn, caused homeowners to take a more pessimistic view of the housing market.
In addition to this rebound effect, the U.S. economy and in particular the job market continues to improve. Provided that wages continue to increase as they have, consumers will continue to have increased home purchasing power.
What’s more, home prices appear to be stabilizing, thus improving affordability for first-time home buyers.
Lack of inventory, however, remains a concern. Although inventory appears to be increasing in certain markets, there is a question as to how much new inventory home builders will bring online this season.
Existing-home sales in February reached a seasonally adjusted annual rate of 5.51 million, according to NAR’s estimates – not quite as high as the 5.61 million that came in February 2018.
“A powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound,” says Lawrence Yun, chief economist for NAR, in a statement.
The median existing-home price for all housing types (including condos and co-ops) in February was $249,500, up 3.6% from about $240,800 in February 2018.
February marked the 84th straight month of year-over-year price gains.
As of the end of February, there were 1.63 million existing-homes for sale, up from 1.59 million in January and up from 1.58 million in February 2018. That’s an increase of 3.2%, year-over-year, and a 3.5-month supply at the current sales pace.
“It is very welcoming to see more inventory showing up in the market,” Yun says. “Consumer foot traffic consequently is rising as measured by the opening rate of SentriLock key boxes.”
Properties remained on the market for an average of 44 days in February, down from 49 days in January but up from 37 days a year ago. Forty-one percent of homes sold in February were on the market for less than a month.
“For sustained growth, significant construction of moderately priced-homes is still needed,” Yun says. “More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains.”
First-time buyers represented 32% of sales in February; all-cash sales accounted for 23%.
Distressed sales represented 4% of sales.
