Existing home sales surprisingly reversed course in February, falling by 6.6% compared to the previous month, following several sharp monthly gains.
That’s according to the National Association of Realtors, which said in a report that the sales dip is primarily due to low inventories of existing homes for sale in the U.S. However, the NAR’s chief economist Lawrence Yun said the dip isn’t a significant drag on the overall real estate market.
“The market is still outperforming pre-pandemic levels,” Yun said.
The NAR reported that all four major U.S. regions saw year-over-year sales gains in February, despite housing supply challenges. Total existing home sales, which are defined as completed transactions of single-family homes, townhomes, condos and co-ops, fell to an annual rate of 6.22 million in February. But sales were still up 9.1% from the same month last year.
Yun warned that a slowdown in sales growth is possible over the coming months, due to rising home prices and mortgage rates that are chipping away at affordability. But he said he still thinks home sales in 2021 will be higher than last year. With more people getting vaccinated against COVID-19, he said the U.S. is on the cusp of returning to a sense of normalcy.
“Many Americans have been saving money, and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy,” he said.
The NAR’s report found that the median existing-home price for all housing types rose 15.8% from a year ago to $313,000 in February. It said prices increased in each of the four major regions, with a 20.6% gain in the West and a 20.5% gain in the Northeast. The Midwest saw median home prices rise 14.2%, while the South saw gains of 13.6%.
One of the main factors behind those is housing inventory, which decreased yet again in February, the NAR said. The number of homes for sale was down 30% from one year ago, with unsold inventory now sitting at a two-month supply at the current sales pace. The average day spent on the market also fell, to less than a month. Homes typically spend just 20 days on the market before being sold, down from 36 days one year ago. Overall, 74% of all homes sold in less than a month.
The only region to see home sales growth in the last month was the West. There, sales increased by 4.6% to an annual rate of 1.37 million, the NAR said, up 12.3% from a year ago with a median price per home of $493,300, way above the national average. Elsewhere, in the Northeast, Midwest and the West, home sales fell by 11.5%, 14.4% and 6.1% respectively, compared to the previous month.