Existing-home sales in February were at a seasonally adjusted annual rate of 5.48 million, down 3.7% compared with 5.69 million in January but up 5.4% compared with February 2016, according to the National Association of Realtors (NAR).
The drop follows an increase of 3.3% in January.
NAR’s estimates include sales of townhouses, condominiums and co-ops.
Holding existing-home sales back were the usual culprits: Tight inventory – which, in turn, is boosting up home prices and affecting affordability – as well as higher interest rates, which tend to make consumers more wary about the timing of their home purchases.
“Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” says Lawrence Yun, chief economist for NAR, in a statement. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
Although NAR’s first-quarter HOME survey shows that most consumers feel now is a good time to sell, sales cannot actually increase “until an increase in listings actually occurs,” Yun says.
The median existing-home price for all housing types in February was $228,400, up 7.7% from $212,100 in February 2016.
February’s price increase was the fastest since last January (8.1%) and marks the 60th consecutive month of year-over-year gains.
As of the end of February, there were about 1.75 million existing homes for sale – an increase of 4.2% compared with January but a decrease of 6.4% compared with a year earlier. That’s about a 3.8-month supply at the current sales pace compared with 3.5 months in January.
NAR notes that as of February, inventory had fallen year over year for 21 straight months.
All-cash sales were 27% of transactions in February – up from 23% in January and 25% a year ago to reach the highest pace since November 2015. Individual investors, who account for many cash sales, purchased 17% of homes in February – up from 15% in January but down from 18% a year earlier. About 71% of investors paid in cash in February, matching the highest rate since April 2015.
About 32% of sales were to first-time home buyers in February – down from 33% in January but up from 30% a year ago.