Sales of previously owned homes in February rose 4.2% from January to 4.26 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors. Industry analysts had expected a drop of 3%.
Sales were 1.2% lower compared with February of last year.
This count is based on closings, so contracts signed in December and January, when mortgage rates were rising and briefly held in the 7% range on the 30-year fixed. Rates today are in the high 6% range.
“Home buyers are slowly entering the market,” said Lawrence Yun, NAR’s chief economist, in a release. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”
Sales were only higher annually in the highest price categories, above $750,000. Sales around the median price were down 3% year over year.
Inventory at the end of February stood at 1.24 million units, an increase of 17% year over year, but still just a 3.5-month supply at the current sales pace. A 6-month supply is considered balanced between buyer and seller.
“We are still in a relatively tight market condition,” Yun said.
That tight supply is keeping pressure on prices. The median price of a home sold in February was $398,400, up 3.8% from the same time last year. That is a record high for the month of February. All four geographical regions of the country saw price increases.
First-time buyers edged back into the market, making up 31% of February sales compared with 26% the year before. Investors, however, pulled back, accounting for just 16% of sales, down from 21% last year.
All-cash sales, however, remained relatively steady at 32% of sales, down just slightly from the year before. Cash is usually favored by investors, so this suggests, given the drop in investor sales, that more owner-occupants are using cash.
While these sales were higher than expected, they are more indicative of the market two months ago than they are now. A separate survey of real estate agents in February from John Burns Research and Consulting found more than half of respondents indicated this spring’s resale market is weaker than normal. This resale index dropped for the first time in four months.
“Current sales ratings remain weak, with 53% of agents reporting weaker than normal sales. This is better than 56% one year ago but lower than January’s 47%. Affordability constraints and economic uncertainty keep many buyers on the sidelines,” according to the report.
