February's Home Sales: A Surprising Turn

The housing market showed unexpected strength in February. Sales of existing homes went up by 4. 2% from January. This is a significant jump, especially when experts had predicted a 3% drop. However, it's important to note that these sales figures are based on deals that closed in February. This means the contracts were likely signed back in December or January. During that time, mortgage rates were climbing and even hit the 7% mark for a brief period. Today, rates are slightly lower, hovering in the high 6% range. The increase in sales isn't evenly spread across all price ranges. Sales of homes priced above $750, 000 saw a boost. But for homes around the median price, sales were down by 3% compared to the same time last year. This trend raises questions about affordability and who is actually buying homes in today's market. One positive sign is the increase in inventory. At the end of February, there were 1. 24 million units available. This is a 17% increase from the previous year. However, this inventory is still considered tight, with only a 3. 5-month supply at the current sales pace. A balanced market typically has a six-month supply. This tight supply is one reason why home prices continue to rise. The median price of a home sold in February was $398, 400, a 3. 8% increase from the same time last year. This is the highest February price on record. All four regions of the country saw price increases. First-time buyers are slowly re-entering the market. They made up 31% of February's sales, up from 26% the year before. However, investors pulled back, accounting for just 16% of sales, down from 21% last year. All-cash sales remained relatively steady at 32% of sales. This suggests that more owner-occupants are using cash, as investors typically prefer this payment method. While February's sales were higher than expected, they don't necessarily indicate a strong market moving forward. A separate survey of real estate agents in February found that more than half of respondents indicated this spring's resale market is weaker than normal. This suggests that affordability constraints and economic uncertainty are keeping many buyers on the sidelines. It's clear that the housing market is complex and influenced by many factors. It's important for buyers and sellers to stay informed and consider all aspects of the market before making decisions.