Existing home sales fell sharply in February as supply declined at a record pace

The single-family homes are seen in this aerial photograph taken above a Lennar Corp. development in San Diego, California.

Bing Guan | Bloomberg | fake images

Existing home closed sales in February fell 6.6% more than expected compared to January, according to the National Association of Realtors.

That put them at a seasonally adjusted annualized rate of 6.22 million units, which was 9.1% higher compared to February 2020.

Despite being on the cusp of the historically busy spring real estate market, homeowners are not listing their properties at the rate they normally would at this time of year. The supply of homes for sale fell 29.5% year-on-year, the biggest annual drop in history, to 1.03 million homes.

At the current sales rate, it would take two months to exhaust this offer. A year ago, there was a three-month supply, which is also considered low.

That meager supply continues to drive home prices, which rose 15.8% in February from year to year. The median price of an existing home sold for the month was $ 313,000. That is the highest price recorded in February. Prices are rising due to the home supply wars, but the median has also tilted upward because more sales are taking place at the higher end of the market.

Home sales priced over $ 1 million were 81% higher compared to a year ago. Homes priced between $ 100,000 and $ 250,000 fell 11%.

“The fact that even with falling sales, days on the market are fast and prices are going up,” said Lawrence Yun, chief economist at Realtors. “This implies that it is not due to the disappearance of market demand, but to a lack of supply.”

Homes are also selling at the fastest rate on record. Average days on the market dropped to just 20.

Buyers in February also faced higher mortgage rates than at the end of last year, reducing their purchasing power. The average 30-year fixed mortgage rate hovered around 2.8% in January, according to Mortgage News Daily. It then started to climb steadily in February, hitting 3.27% by the end of the month. However, those who closed on homes in February likely would have locked their rates in January.

“Already this year, the monthly cost of a $ 300,000 loan increased by $ 70,” said Danielle Hale, chief economist at realtor.com. “Going forward, the large and growing cohort of consumers reaching the optimal age to buy a home will keep interest high, but whether buyers can translate that desire into ownership will depend on whether buyers’ incomes rise with growth. economically, buyers are willing to allow housing costs to absorb more of their monthly budgets, or if more homes for sale will help slow the pace of home price increases. “

Home builders continue to face headwinds for faster production, such as higher costs for land, labor and materials, as well as supply chain delays. Single-family home construction was lower in February than expected, but some of that could be related to harsh winter weather in the south.

Regionally, existing home sales fell 11.5% month-over-month in the Northeast. They fell 14.4% in the Midwest and 6.1% lower in the South. The West was the only region that posted a 4.6% monthly gain.


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