Existing home sales decreased in February to a seasonally adjusted annual rate of 6.02 million, continuing a pattern of seesawing gains and declines over the past few months, according to the National Association of Realtors (NAR). Total existing sales, which includes single-family homes, townhomes, condominiums, and co-ops, decreased 7.2% from January. Sales decreased 2.4% on a year-over-year (YOY) basis, according to the NAR.
“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increase,” says Lawrence Yun, NAR’s chief economist. “Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate.”
Yun says monthly payments have increased 28% on a YOY basis and the market “remains swift with multiple offers still being recorded on most properties.” Rising rates and escalating prices are also likely preventing some consumers from making purchases.
Housing inventory at the end of February totaled 870,000 units, a 2.4% increase from January but a 15.5% decrease from February 2021. Unsold inventory sits at a 1.7-month supply at the current sales pace, up from the record-low supply in January of 1.6 months.
“The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings,” Yun says. “However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction.”
The median existing home price for all housing types in February was $357,000, a 15% increase from February 2021. The price increase marks the 120th consecutive month of YOY increases.
Properties typically remained on the market for 18 days in February, and 84% of homes sold in February 2022 were on the market for less than a month.
First-time buyers were responsible for 29% of sales in February, an increase from 27% in January. Individual investors or second-home buyers purchased 19% of homes in February, and all-cash sales accounted for a quarter of transactions in February.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 3.76% in February, up from 3.45% in January. The average commitment rate across all of 2021 was 2.96%.
Single-family home sales increased to a seasonally adjusted annual rate of 5.35 million in February, down 7% from 5.75 million in January and down 2% on a YOY basis. The median existing single-family home price was $363,800 in February, a 15.5% increase compared with February 2021.
Existing home sales declined on a month-over-month basis in February in each of the four major U.S. regions and fell on a YOY basis in three of the four regions.
Existing sales in the Northeast fell 11.5% in February and 12.7% on a YOY basis. Sales in the Midwest declined 11.3% compared with January and decreased 1.5% compared with February 2021. The South saw sales decrease by 5.1% on a month-over-month basis in February, but sales increased 3% on a YOY basis in the region. The South experience the highest pace of price appreciation for the sixth straight month, according to the NAR.
“Employment is vital for housing demand,” Yun says. “The Southern states are seeing faster job growth, and, consequently, it’s the only region to experience a sales gain from a year ago.”
Existing home sales in the West fell 4.7% in February compared with January and decreased 8.3% on a YOY basis.
