Home sales are moving in a seesaw pattern as double-digit home price gains and near-record-low inventory continue to keep aspiring buyers from purchasing a home. Existing home sales, completed transactions that include single-family homes, townhomes, condominiums, and co-ops, dropped by 7.2 percent in February compared to January. Sales are down 2.4 percent compared to a year ago, according to the National Association of Realtors (NAR).
Housing affordability continues to be a major challenge as buyers are getting a double whammy: rising mortgage rates and sustained price increases, according to an NAR spokesman. Some who had previously qualified at a three percent mortgage rate are no longer able to buy at the four percent rate.
Monthly housing payments have jumped by 28 percent compared to a year ago. The market remains swift with multiple offers still being recorded on most properties. Rising rates and escalating prices have prevented many consumers from making a home purchase.
The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers’ savings. However, the pace of price appreciation is expected to slow as demand cools and as supply improves somewhat due to more home construction and the peak selling season, according to the NAR.
Here’s some of the top housing indicators from February:
- Home prices: The median existing-home sales price increased to $357,300, which is a 15 percent jump compared to a year earlier. Prices increased in every region across the country in February.
- Inventory: Total housing inventory is up 2.4 percent from January’s record low. However, inventories are still down 15.5 percent from a year ago. Unsold inventory is at a 1.7-month supply at the current sales pace.
- Days on the market: Eighty-four percent of homes sold in February were on the market for less than a month. Properties typically remained on the market for 18 days in February, down from 19 days in January and 20 days from February 2021.
- First-time buyers: First-time buyers comprised 29 percent of sales in February, down from 31 percent compared to a year ago.
- Investors or second-home buyers: Individual investors or second-home buyers purchased 19 percent of homes in February, up from 17 percent a year ago. Investors and second-home buyers tend to account for the largest amount of all-cash sales, which made up 25 percent of transactions in February, which is up from 22 percent a year ago.
- Distressed sales: Foreclosures and short sales represented less than one percent of sales in February, continuing an ultra-low presence in the housing market.
The South region was the only major region in the country that posted an increase in existing-home sales in February compared to a year ago. Employment is vital for housing demand, says the NAR. The southern states are seeing faster job growth, and consequently it is the only region to experience a sales gain from a year ago.
In the West region, which includes Colorado, existing-home sales fell 4.7 percent from the previous month, down 8.3 percent from one year ago. Median price was $512,600, up 7.1 percent from February 2021. The Midwest has a median price of $248,900, and the Northeast region had a median price of $383,700.