Prime Highlights:
Sales of previously owned homes rose by 4.2% from January to 4.26 million units, exceeding expectations.
Sales were 1.2% lower than February 2024, reflecting the ongoing impact of higher mortgage rates.
Key Background:
In February, U.S. home resales increased unexpectedly by 4.2% from January, reaching a seasonally adjusted annual rate of 4.26 million units, according to the National Association of Realtors (NAR). This performance surpassed analyst predictions, which had anticipated a 3% decline. However, despite the positive monthly growth, sales were still down 1.2% year-over-year compared to February 2024.
This rebound in resales occurred amid rising mortgage rates, which briefly hovered around 7% in December and January before stabilizing in the high 6% range. NAR’s chief economist, Lawrence Yun, attributed the uptick in sales to more housing inventory, which has helped relieve pent-up demand. February saw 1.24 million homes available for sale, marking a 17% increase from the previous year. However, the 3.5-month supply remains below the balanced 6-month threshold, indicating a persistently tight housing market.
The median sale price of homes in February reached a record high for the month, at $398,400—an increase of 3.8% year-over-year. Price growth was widespread across all regions of the country, with sales in the higher price segments—above $750,000—performing better than those in the lower price brackets. Notably, first-time buyers made up 31% of sales, an increase from 26% the previous year, while investor activity decreased, representing just 16% of sales.
While February’s strong performance outpaced expectations, real estate agents have cautioned that the spring market may not be as robust. A survey by John Burns Research and Consulting revealed that over half of respondents indicated weaker-than-usual sales in the spring market, largely due to affordability challenges and economic uncertainty.
