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Sales of existing homes 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 been expecting a slight drop.
Sales were down 3.3% year over year, but it was the largest monthly gain since February 2023. Sales surged the most in the West, up 19.4%, and the South, up 16.4%. Sales in the Northeast were unchanged.
“Additional housing supply is helping to satisfy market demand,” said Lawrence Yun, NAR’s chief economist. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”
Inventory rose 10.3% year over year to 1.07 million homes for sale at the end of February. That represents a still low 2.9-month supply at the current sales pace.
Higher demand continued to push the median price higher, up 5.7% from the year before to $384,500 — the eighth straight month of annual gains. Competition was stiff, with 20% of homes selling above list price.
The sales count is based on closings, so contracts likely signed in December and January, when the 30-year fixed mortgage rate dropped to the mid 6% range. It is now over 7%, according to Mortgage News Daily.
First-time buyers, however, did not surge with overall sales. They represented just 26% of buyers in February, down from 28% in January. Roughly 40% is the historical norm. All-cash sales were at 33%, up from 28% the year before.
“The stock market, maybe that is helping, or the record-high home prices. People from expensive states like California are going to more affordable markets like Florida or Georgia and paying all cash,” Yun said, adding that consumers may be accepting a “new normal” for mortgage rates.