Existing-home sales rise even as prices hit record high

The housing market showed a surge of activity in the usually slow month of February, a new report by the National Association of Realtors (NAR) shows. Sales of existing homes rose sharply from last month as more listings hit the market.

“I guess it was inevitable,” NAR Chief Economist Lawrence Yun told reporters.

The annual pace of home sales had dipped below 4 million in recent months, but it spiked to 4.38 million in February. A growing population and strong job growth are creating demand for homes, so the slow pace of sales was bound to end, Yun said.

What’s more, life goes on. Job changes, marriages, divorces and other life events can force buyers and sellers to finally make a move, regardless of market conditions. “Many people simply delayed, but they can no longer delay,” he said.

While mortgage rates are below the 8 percent mark briefly seen in October, they are still relatively high: an average of 7.07 percent for a 30-year fixed-rate loan as of March 20, according to Bankrate’s most recent survey of large lenders. That, combined with stubbornly high prices, means affordability challenges remain daunting for homebuyers. The share of first-time homebuyers in particular fell to 26 percent in February, a slight decrease from both the previous month and the previous year.

“The fate of the housing market in the coming months will be dictated in part by the direction of mortgage rates, as well as the health of the broader economy,” says Mark Hamrick, Bankrate’s senior economic analyst. “The market could benefit from a combination of tailwinds, if they were to develop and are sustained.”

Existing-home sales tick upward

The existing-home-sales statistic counts all completed sales of non-new-construction homes, including single-family houses, condos, townhouses and co-ops. According to NAR, the number of sales nationally rose 9.5 percent month-over-month to an annual pace of 4.38 million homes in February 2024. Even with that uptick, though, it’s still a decrease of 3.3 percent year-over-year.

Regionally, sales in the West rose the most in February, up 16.4 percent from a month ago but down 1.2 percent from a year ago. In the South, sales rose 9.8 percent for the month but declined 2.9 percent for the year. In the Northeast, sales were unchanged for the month and down 7.7 percent year-over-year, while sales in the Midwest increased 8.4 percent monthly but decreased 3.7 percent annually.

Days on market

Properties typically remained on the market for 38 days in February, up from 36 days in January. In February 2023 that figure was 34 days. This time frame is likely to shorten as we enter the spring selling season.

Home prices rise for eighth consecutive month

The nationwide median sale price for existing homes in February clocked in at $384,500, up 5.7 percent from last year and the eighth month in a row to record year-over-year increases. In fact, this was the highest-priced February on record, according to Yun. An elevated share of cash deals — 33 percent, as compared to 28 percent a year ago — indicated a market propelled by record-high housing wealth.

In June 2022, the median price hit its highest-ever recorded price at $413,800. The U.S. housing market had been on a remarkable run of 131 consecutive months of year-over-year median sale price increases — the longest-running streak since NAR started keeping records — before finally dropping year-over-year in February 2023.

All four major regions once again saw annual price increases in February. The West continued to have the highest median price by far at $593,000, up 9.1 percent from a year ago. In the Northeast, the median rose 11.5 percent from a year ago to $420,600. The South’s median price rose 4.1 percent to $354,200, and the Midwest’s median rose 6.8 percent to $277,600. “Due to inventory constraints, the Northeast was the regional underperformer in February home sales but the best performer in home prices,” Yun said. “More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”

Housing inventory remains low

Total housing inventory — the overall number of homes on the market for sale — sat at 1.07 million units at the end of February. That’s a slight improvement, up 5.9 percent from January and 10.3 percent from a year ago. Even so, it represents only a 2.9-month supply, which is still well short of the five to six months typically required for a healthier, more balanced market.

The sharp rise in mortgage rates seen this past fall has kept many homeowners from selling, which keeps existing homes off the market. Those who locked in rates at 3 percent several years ago, understandably, are not keen on moving with current rates more than double that.