US Markets
Thursday, March 21st, 2024 3:09 pm EDT
Key Points
- Existing home sales surged 9.5% in February to 4.38 million units, surpassing expectations of a slight decline, with the largest monthly gain since February 2023. Sales saw significant increases in the West (up 19.4%) and the South (up 16.4%), while remaining unchanged in the Northeast. Year over year, however, sales were down by 3.3%.
- Lawrence Yun, NAR’s chief economist, attributes the surge in sales partially to an increase in housing supply, which is helping to meet market demand driven by population and job growth. However, the timing of purchases will depend on prevailing mortgage rates and inventory availability.
- Inventory rose by 10.3% year over year to reach 1.07 million homes for sale by the end of February, representing a low 2.9-month supply at the current sales pace. Despite the increase in supply, higher demand continued to drive up median prices, which rose by 5.7% from the previous year to $384,500, marking the eighth consecutive month of annual gains. Additionally, competition remained fierce, with 20% of homes selling above list price.
In February, existing home sales in the United States experienced a surprising surge of 9.5% to reach 4.38 million units, adjusted on an annualized basis, according to data from the National Association of Realtors (NAR). This increase came as a deviation from the expectations of housing analysts who had anticipated a slight decline. Despite a 3.3% decrease compared to the previous year, this marked the most substantial monthly gain since February 2023. Notably, the Western region saw the most significant surge in sales, rising by 19.4%, followed closely by the South with a notable 16.4% increase. Sales in the Northeast, however, remained unchanged during this period. Lawrence Yun, the chief economist at NAR, attributed this surge partly to an increase in housing supply, which has begun to meet the growing demand in the market. He emphasized that while housing demand has been steadily rising due to population and job growth, the timing of purchases would depend on prevailing mortgage rates and the availability of inventory.
The inventory of homes for sale saw a year-over-year increase of 10.3%, reaching 1.07 million homes by the end of February. However, this still reflects a relatively low 2.9-month supply at the current pace of sales. With continued high demand, the median home price rose by 5.7% from the previous year, reaching $384,500. This marked the eighth consecutive month of annual gains in median home prices, with fierce competition observed, as 20% of homes were sold above their listed prices. The timing of these sales likely corresponds to contracts signed in December and January, coinciding with a period when the 30-year fixed mortgage rate dropped to the mid-6% range, which has since increased to over 7%, as reported by Mortgage News Daily.
Despite the overall surge in sales, the proportion of first-time buyers did not experience a corresponding increase, representing only 26% of buyers in February, down from 28% in January and notably lower than the historical average of around 40%. Concurrently, all-cash sales increased to 33%, up from 28% the previous year. Yun speculated that factors such as the stock market’s performance and record-high home prices may be contributing to this trend, with individuals from more expensive states like California relocating to more affordable markets like Florida or Georgia, often making purchases with cash. Additionally, consumers may be adjusting to what Yun described as a “new normal” for mortgage rates, suggesting a potential shift in homebuying behavior amidst evolving market conditions.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/03/21/february-2024-home-sales-spike.html
