Existing Sales Rebound, Surprising Analysts
Existing home sales rebounded unexpectedly last month, surprising analysts as buyers took advantage of cooling rates and rising inventory.
Sales increased 4.2% to a seasonally adjusted annual rate of 4.26 million, according to the National Association of Realtors.
They were down 1.2% from the year prior, however.
The South and West registered growth, while the Midwest remained stable and the Northeast clocked a decline.
“Home buyers are slowly entering the market. Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand,” said NAR Chief Economist Lawrence Yun.
Severe winter weather slowed homebuyers significantly at the start of the year, and many of them are returning to the market just in time for the early spring buying season.
Yun also noted that February 2024’s leap day affected sales, contributing to the annual decline here. After adjusting for its effects, NAR believes “the momentum for home sales is flashing encouraging signs.”
Total housing inventory at the end of February was 1.24 million units, up 5.1% from January and 17% YOY. This is a 3.5-month supply at the current sales pace.
The median existing price was $398,400, up 3.8% annually. All four regions posted price increases.
“Each one percentage point gain in home price translates into an approximately $350 billion increase in housing equity for American property owners,” Yun said. “That means a gain of nearly $1.3 trillion in home value appreciation at a time when the current stock market is undergoing a correction. Moreover, the ongoing housing shortage, coupled with historically low mortgage default rates, implies a solid foundation for home values.”
How the market fares moving forward will be heavily influenced by the economy, however, and continued improvements are not guaranteed.
The Central Bank chose to hold interest rates steady in its March meeting this week, citing the President Donald Trump administration’s policies.
“The new Administration is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,” Fed Chairman Jerome Powell said in prepared remarks Wednesday afternoon.
“It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy… As we parse the incoming information, we are focused on separating the signal from the noise as the outlook evolves.”