Feb. Existing Home Sales Up 3%
Existing home sales in February took back what it lost in January, rising by 3 percent, the National Association of Realtors reported yesterday.
NAR said total existing home rose to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, the first in three months, sales improved by 1.1 percent above a year ago.
The report said single-family home sales rose by 4.2 percent to a seasonally adjusted annual rate of 4.96 million in February from 4.76 million in January and improved by 1.8 percent above the 4.87 million pace a year ago. The median existing single-family home price rose to $243,400 in February, up 5.9 percent from a year ago. Existing condominium and co-op sales declined by 6.5 percent to a seasonally adjusted annual rate of 580,000 units in February and by nearly 5 percent from a year ago. The median existing condo price rose to $227,300 in February, which is 5.7 percent above a year ago.
Regionally, increases in the South and West more than offset losses elsewhere. Sales in the South jumped by 6.6 percent to an annual rate of 2.41 million in February and by 3.4 percent from a year ago. The median price in the South rose to $215,700, up 5.4 percent from a year ago. In the West, sales surged by 11.4 percent to 1.27 million in February and by 2.4 percent from a year ago. The median price in the West rose to $370,600, up 9.6 percent from a year ago.
In the Northeast, sales fell by 12.3 percent to an annual rate of 640,000 and by 7.2 percent from a year ago. The median price in the Northeast rose to $258,900, 3.6 percent above a year ago. In the Midwest, sales dipped by 2.4 percent to 1.22 million in February (unchanged from a year ago). The median price in the Midwest rose to $179,400, up 4.5 percent from a year ago.
“The very healthy U.S. economy and labor market are creating a sizeable interest in buying a home in early 2018,” said NAR Chief Economist Lawrence Yun. “However, even as seasonal inventory gains helped boost sales last month, home prices–especially in the West–shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar.”
Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said February’s rebound was likely driven by unseasonably wild and dry weather in much of the West and South, which allowed for more home buying than usual during the slow winter months. “The weather was not as accommodating in the Northeast and Midwest in March, which have seen snowstorms every week, and promises to be even worse,” he said.
Cheryl Young, senior economist with Trulia, San Francisco, said reduced inventories means “Americans are finding less, but buying what they find.”
“While constraints on supply have been weighing on homebuyers for several years, rising mortgage rates and tax reform since the start of 2018 threatened demand,” Young said. “Even as prospective home buyers faced reduced affordability, we have seen little evidence that demand has taken a hit…with demand remaining above its pre-recession peak, prospective home buyers are in for another tough spring home buying season as ready home buyers descend on a scant number of homes.”
NAR reported the median existing-home price for all housing types in February rose to $241,700, up 5.9 percent from a year ago and the 72nd straight month of year-over-year gains. Total housing inventory at the end of February rose by 4.6 percent to 1.59 million existing homes available for sale, but was 8.1 percent lower than a year ago (1.73 million) and has fallen year-over-year for 33 consecutive months. Unsold inventory is at a 3.4-month supply at the current sales pace (3.8 months a year ago).
The report said properties typically stayed on the market for 37 days in February, down from 41 days in January and 45 days a year ago. Forty-six percent of homes sold in February were on the market for less than a month.
NAR said first-time buyers represented 29 percent of sales in February, unchanged from last month and down from 31 percent a year ago. All-cash sales represented 24 percent of transactions in February, up from 22 percent in January and the highest since last February (27 percent). Individual investors purchased 15 percent of homes in February, down from 17 percent in January and unchanged from a year ago.
Vitner said lack of inventory of lower-price offerings is holding back first-time buyers, which accounted for just 29 percent of sales in February, down from 32 percent one year ago. “We expect home sales to gradually gain momentum this year, but reports for the next few months will be heavily influenced by the weather and continued lack of supply,” he said. “There has been a persistent widening in the gap between the share of consumers that feel now is a good time to sell a home and those that feel now is a good time buy. Hopefully that will bring on more supply this spring and help stem the sharp run-up in prices.”
The report said distressed sales represented 4 percent of sales in February, down from 5 percent in January and 7 percent a year ago. Three percent of February sales were foreclosures; 1 percent were short sales.
