Single-family homes are featured in this aerial photo, taken over a Lennar Corp. development. in San Diego, California.
Bing Guan | Bloomberg | Getty images
Closed sales of existing homes in February fell 6.6% higher than expected compared to January, according to the National Association of Realtors.
That brought them to a seasonally adjusted annualized rate of 6.22 million units, which was 9.1% higher compared to February 2020.
Despite being on the brink of the historically busy spring housing market, homeowners are not listing their properties for sale at the rate they normally would at this time of year. The supply of homes for sale fell 29.5% year over year, the largest annual decline ever, to 1.03 million homes.
At the current sales rhythm, it would take two months for this stock to be exhausted. A year ago, there was a three-month supply, which is also considered low.
That tight supply continues to fuel house prices, which were 15.8% higher year over year in February. The median price of an existing home sold during the month was $ 313,000. That is the highest price ever in February. Prices are rising due to house bidding wars, but the median was also skewed higher as more sales are taking place at the top end of the market.
Sales of homes priced over $ 1 million were 81% higher than a year ago. Homes priced between $ 100,000 and $ 250,000 were down 11%.
“The fact that even with the fall in sales, the days in the market are fast and prices are rising,” said Lawrence Yun, chief brokers economist. “This implies that it is not because demand is disappearing from the market, it is really a lack of supply.”
Homes are also selling at the fastest rate ever. The average number of days on the market dropped to just 20.
Buyers also faced higher mortgage rates in February than at the end of last year, reducing their purchasing power. According to Mortgage News Daily, the average interest rate on the 30-year fixed mortgage hovered around 2.8% in January. It then started to rise steadily in February, reaching 3.27% by the end of the month. However, those who close their homes in February would likely have locked their rates in January.
“This year, the monthly cost of a $ 300,000 loan is already up $ 70,” said Danielle Hale, chief economist at realtor.com. Looking ahead, the large and still growing cohort of consumers reaching the best age to buy a home will keep interest high, but whether shoppers can translate that desire into ownership will depend on whether buyers’ income Along with rising economic growth, buyers are willing to pay housing costs. Take up more of their monthly budget, or have more homes for sale help curb the pace of house price increases. “
Home builders continue to face headwinds from faster production, such as increased land, labor and materials costs, and supply chain delays. The start of single-family homes was lower than expected in February, but some of that may be due to the harsh winter weather in the south.
Regionally, sales of existing homes in the Northeast fell 11.5% month-to-month. They were down 14.4% in the Midwest and down 6.1% in the South. The West was the only region with a monthly profit of 4.6%.