After 12 months of declines, existing-home sales increased in February, according to the National Association of Realtors (NAR). Sales saw the highest monthly percentage increase since July 2020. What’s more, every sales region in the country reported month-over-month sales gains; however, every region also experienced year-over-year declines. According to Lawrence Yun, chief economist for NAR, uncertainty around the future of mortgage rates means homebuyers are taking advantage of any rate decline. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
Prices Decline in Some Markets
After a record streak of 131 consecutive months of year-over-year price increases, home prices declined in February; the median existing-home price for all housing types reached $363,000, a decline of just 0.2% from February 2022. Prices increased in the Midwest and South but dropped in the Northeast and West. The average property remained available for 34 days, up from 33 days a month ago and 18 days a year ago. Of all the homes sold in February, 57% were available for less than one month.
By the end of February, there were 980,000 units available for sale, unchanged from a month ago and up 15.3% from a year ago. At the current sales pace, this level of inventory would supply the market for 2.6 months, down 10.3% from January but an improvement from the 1.7-month supply recorded in February 2022. Inventory levels are still at historic lows. “Consequently,” added Yun, “multiple offers are returning on a good number of properties.”
2022 Records Lowest Number of First-Time Buyers
Multiple offer situations and uncertainty in the mortgage industry may prove to be a hindrance to first-time buyers, who accounted for 27% of all home purchases in February, down from 31% a month ago and 29% a year ago. According to the NAR “2022 Profile of Home Buyers and Sellers,” the annual share of first-time buyers was only 26%, the lowest on record.
More Cash Sales
Twenty-eight percent of February’s transactions were all-cash sales, down from 29% a month ago but up from 25% a year ago. Individual investors and second-home buyers account for many all-cash purchases; these two groups were responsible for 18% of all home purchases in February, up from 16% in January but down from 19% in February 2022. Distressed sales, including foreclosures and short sales, represented 2% of all transactions, virtually unchanged both month over month and year over year.
Regional Sales Breakdown
Northeast: Existing-home sales annual rate of 520,000; an increase of 4% from January 2023 but a decrease of 25.7% from February 2022. The median sales price of $366,100 represented a 4.5% decrease from February 2022.
Midwest: Existing-home sales annual rate of 1.09 million; an increase of 13.5% from January 2023 but a decrease of 18.7% from February 2022. The median sales price of $261,200 represented a 5% increase from February 2022.
South: Existing-home sales annual rate of 2.11 million; an increase of 15.9% from January 2023 but a decrease of 21.3% from February 2022. The median sales price of $342,000 represented a 2.7% increase from February 2022.
West: Existing-home sales annual rate of 860,000; an increase of 19.4% from January 2023 but a decrease of 28.3% percent from February 2022. The median sales price of $541,100 represented a 5.6% decrease from February 2022.