In February, existing home sales experienced their largest monthly gain in four years, according to the latest report from the National Association of Realtors.
Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, spiked 11.8% from January to a seasonally adjusted rate of 5.51 million in February, the highest monthly increase since December 2015. However, the report reveals sales are 1.8% below February 2018’s rate.
NAR Chief Economist Lawrence Yun said a powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound.
The median existing home price for all housing types increased to $249,500 rising 3.6% from last February’s rate of $240,800. This marks the 84th straight month of year-over-year gains.
Total housing available for sale increased from January, moving forward from 1.59 million existing homes on the market to 1.63 million in February. Notably, this is a 3.2% increase from last year’s total of 1.58 million.
“The housing market is poised for a rebound as existing-home sales soared in February after hitting an over three-year low last month,” Trulia Chief Economist Cheryl Young said. “With spring home buying season around the bend, sliding mortgage rates and moderating home prices will continue to boost demand and drive sales.”
Unsold inventory rests at a 3.5-month supply at the current sales pace, falling from last month’s total of 3.9 but up February 2018’s total of 3.4 months.
Properties stayed on the market an average of 44 days in February, moving down from 44 days in January and 49 days in 2018. The report states that 41% of homes stayed on the market for less than a month.
Yun said for sustained growth, significant construction of moderately priced-homes is still needed.
“More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains," he added.
According to NAR, a typical homeowner accumulated an estimated $8,700 in housing equity over the past 12 months and $21,300 over the past 24 months.
The report shows that the average commitment rate for a 30-year, conventional, fixed-rate mortgage fell from 4.46% the month prior to 4.37% in February and the average commitment rate for all of 2018 was 4.54%, according to Freddie Mac.
“We’re very happy to see homebuyers returning to the market, as the beginning of Spring represents a prime time to purchase a new home,” said NAR President John Smaby. “Potential buyers and sellers should seek out a local Realtor to stay abreast of the market and take advantage of the various housing benefits that are currently being extended during housing transactions.”
First-time buyers comprised 32% of sales in February, an increase from both January and last February’s rate of 29%. NAR revealed that the annual share of first-time buyers held steady at 33%.
Single-family homes rose from a seasonally adjusted annual rate of 4.36 million in January to 4.94 million in February, which is 1.5% above 5.01 million a year ago. The median existing single-family home price was $251,400 in February, increasing 3.6% from February 2018.
Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 570,000 units in February, holding steady from January, but still down 5% from a year ago. The median existing condo price was $233,000 in January, increasing 3.1% from 2018.
Existing home sales in the Northeast held steady from last month’s, but the annual rate of 690,000 is 1.5% above a year ago. The median price in the Northeast increased 3.8% from February 2018 and came in at $272,900.
In the Midwest, existing-home sales pushed forward 9.5% from the prior month at an annual rate of 1.27 million and is roughly even to February 2018’s level. The median price in the Midwest was $188,800, increasing 5.4% from this time last year.
Southern existing-home sales shot up 14.9% to an annual rate of 2.39 million in February. This is down 0.4% from last year. The median price in the South rose to $219,300, increasing 2.5% from February 2018.
Lastly, existing home sales in the West jumped a whopping 16% to an annual rate of 1.16 million in February, which is a 7.9% below February 2018. The median price in the West was $379,300 increasing 3% from this time last year.
Realtor.com Chief Economist Danielle Hale said sales still lag behind 2018 levels by 1.8%, but lower mortgage rates, greater availability of homes for sale, and a strong jobs market that's creating income growth are all helping to power buyers and setting this spring up to be an improvement over the dismal start to 2019.
“Buyers will still contend with rising prices in most markets, as shown by the 3.6% growth in prices of homes sold in February, but the gains are slowing, which will help buyers keep pace,” Hale continued. “While not the frenzy we saw in early 2018, this year we expect the housing market to gain momentum as we move further into the year."
