Sales of existing homes in the US rebounded in February, increasing by 4.2% from January to a seasonally adjusted annual rate of 4.26 million units.
This growth was attributed to lower mortgage rates and a higher inventory of properties available for sale.
The big picture: Despite the monthly increase, home sales were down by 1.2% compared to February of the previous year, marking the end of a streak of five consecutive yearly increases in sales.
- The national median sales price for homes rose by 3.8% in February compared to the previous year, reaching an all-time high of $398,400. This increase represented the 20th consecutive month of annual price growth.
State of play: The housing market in the US experienced a downturn in 2022 as mortgage rates began to rise from pandemic-era lows.
- However, a recent decline in mortgage rates, dropping to an average of 6.76% by the end of February, may signal a potential uptick in sales as the spring homebuying season approaches.
- Rising home prices and elevated mortgage rates have made it difficult for many potential homebuyers, especially first-time buyers, who lack the equity from existing homes to facilitate a new purchase.
Go deeper: In February, first-time buyers accounted for 31% of home sales, up from 28% in January and 26% in February of the previous year. The share of all-cash home purchases also increased to 32% in February.
- The inventory of unsold homes in the US expanded to 1.24 million units by the end of February, up 5.1% from January and 17% from the previous year.
- Properties are taking longer to sell, with homes remaining on the market for an average of 42 days in February. This is an increase from 41 days in January and 38 days in February of the previous year, demonstrating the impact of market conditions on sales dynamics.
