In a surprising turn of events, home sales in the United States experienced a significant surge of 9.5% in February, marking the highest monthly increase in the past year. This surge can be attributed to improved supply conditions in the housing market, which have helped to satisfy the growing demand for homes across the country.
According to the National Association of Realtors, existing home sales reached a total of 4.38 million units on a seasonally adjusted annualized basis. This figure exceeded expectations, as housing analysts had predicted a slight drop in sales for the month. While sales were down 3.3% compared to the previous year, this increase represents the largest monthly gain since February of the previous year.
The surge in home sales was particularly prominent in the West and South regions of the country, with sales increasing by 19.4% and 16.4% respectively. In contrast, sales in the Northeast remained unchanged. Lawrence Yun, the chief economist at NAR, attributes this increase in sales to the additional housing supply that has become available to meet the growing market demand. He also highlights the role of population and job growth in driving this demand, emphasizing that the timing of purchases will be influenced by prevailing mortgage rates and the availability of inventory choices.
Inventory levels have seen a notable increase as well, rising by 10.3% compared to the previous year. This has resulted in a total of 1.07 million homes available for sale at the end of February. However, this still represents a relatively low 2.9-month supply at the current sales pace, indicating that further efforts are needed to meet the demand in the market.
As a result of this increased demand and limited supply, the median home price has continued to rise. In February, the median price reached $384,500, marking a 5.7% increase from the previous year. This marks the eighth consecutive month of annual gains in home prices. The competition among buyers has intensified, with 20% of homes selling above the list price.
It is important to note that the sales count is based on closings, which means that contracts were likely signed in December and January when mortgage rates were lower. However, according to Mortgage News Daily, the current 30-year fixed mortgage rate has risen to over 7%. This may have an impact on the timing of purchases in the coming months.
Interestingly, while overall sales experienced a surge, first-time buyers did not keep pace with this trend. In February, first-time buyers represented only 26% of buyers, a decrease from 28% in January. This is significantly below the historical norm of around 40%. Conversely, all-cash sales accounted for 33% of purchases, up from 28% the previous year. Lawrence Yun suggests that factors such as the stock market and record-high home prices may be driving individuals from expensive states like California to more affordable markets like Florida or Georgia, where they can pay for homes in cash.
Overall, the remarkable surge in home sales in February comes as a welcome surprise in the housing market. Improved supply conditions have helped to meet the growing demand for homes, leading to an increase in sales across the country. However, challenges such as rising mortgage rates and limited inventory still remain. As the market continues to evolve, it will be interesting to see how these factors shape the future of the real estate industry.
