Existing Home Sales Rise 4th Straight Month

Existing home sales posted the largest month-over-month gain since 2015, rising for the fourth straight month in February, the Mortgage Bankers Association reported Friday.

NAR reported total existing home sales jumped by 11.8 percent in February from January to a seasonally adjusted annual rate of 5.51 million. However, sales fell by 1.8 percent from a year ago (5.61 million).

Single-family home sales rose to a seasonally adjusted annual rate of 4.94 million in February, up from 4.36 million in January but down 1.4 percent from 5.01 million a year ago. The median existing single-family home price rose to $251,400 in February, up 3.6 percent from a year ago.

Existing condominium and co-op sales were unchanged in February at a seasonally adjusted annual rate of 570,000 units and down 5.0 percent from a year ago. The median existing condo price rose to $233,300 in February, which is up 3.1 percent from a year ago.

Three of the four major U.S. regions saw sales gains, while the Northeast remained unchanged from last month. The annual rate of 690,000 in the Northeast is 1.5 percent above a year ago. The median price in the Northeast rose to $272,900, up 3.8 percent from a year ago.

Sales in the South jumped by 14.9 percent to an annual rate of 2.39 million in February, but down 0.4 percent from last year. The median price in the South rose to $219,300, up 2.5 percent from a year ago. In the West, sales jumped by 16 percent to an annual rate of 1.16 million in February, but 7.9 percent below a year ago. The median price in the West rose to $379,300, up 3.0 percent from February 2018. In the Midwest, sales rose by 9.5 percent from last month to an annual rate of 1.27 million, unchanged from a year ago. The median price rose to $188,800, up 5.4 percent from last year.

“Existing home sales bounced back in February after a sluggish start to the year,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The 5.5 million sales pace last month was the strongest since March of last year, and is a sign that some buyers were able to shrug off some of the market uncertainty in late 2018 and early 2019.”

Kan noted although home sales were still below where they were a year ago, “we are optimistic that there will be more growth in purchase activity in the coming months as inventory increases, mortgage rates hover below year ago levels, wages continue to grow and more first-time buyers enter the market.”

NAR Chief Economist Lawrence Yun attributed a “powerful combination” of lower mortgage rates, more inventory, rising income and higher consumer confidence driving the sales rebound.

“For sustained growth, significant construction of moderately priced-homes is still needed,” Yun said. “More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains.”

Mark Vitner, senior economist with Wells Fargo Securities, Charlotte, N.C., said sales benefited from better weather early this year and lower mortgage rates. “Homes are remaining on the market longer than a year ago, which has moderated price appreciation,” he said.

NAR reported the median existing-home price for all housing types in February rose to $249,500, up 3.6 percent from a year ago, ($240,800), the 84th straight month of year-over-year gains. Total housing inventory at the end of February increased to 1.63 million, up from 1.59 million existing homes available for sale in January, a 3.2 percent increase from 1.58 million a year ago. Unsold inventory is at a 3.5-month supply at the current sales pace, down from 3.9 months in January but up from 3.4 months a year ago.

The report said properties remained on the market for an average of 44 days in February, down from 49 days in January but up from 37 days a year ago. Forty-one percent of homes sold in February were on the market for less than a month.

NAR said a typical homeowner accumulated an estimated $8,700 in housing equity over the past 12 months and $21,300 over the past 24 months.

First-time buyers were responsible for 32 percent of sales in February, up from last month and a year ago (both 29 percent). All-cash sales accounted for 23 percent of transactions in February, equal to January’s percentage, but down from a year ago (24 percent). Individual investors purchased 16 percent of homes in February, unchanged from January but a tick up from a year ago (15 percent).

The report said distressed sales represented 4 percent of sales in February, unchanged from January and a year ago. One percent of February sales were short sales.