After dropping nearly 5% in January compared to December, existing-home sales increased to an annual rate of about 4.88 million in February – up about 1.2% compared to about 4.82 million in January – according to the National Association of Realtors (NAR).
Despite the recent slowdown, existing-home sales were up 4.7%, year over year, compared to February 2014.
February marked the fifth consecutive month that existing-home sales were up on a year-over-year basis, according to NAR.
The median existing-home price for all housing types in February was $202,600, which is 7.5% above February 2014.
As of February, the average existing-home price had increased for 36 consecutive months, on a year-over-year basis.
One reason existing-home sales are so low, compared to historical norms, is that many homeowners are weary of selling due to economic uncertainties – which, in turn, is constraining the inventory of homes available. Some of these homeowners are still underwater on their mortgages – which means they have no incentive to sell.
‘Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,’ says Lawrence Yun, chief economist for NAR, in a statement. ‘Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.’
Harsh winter conditions in the Northeast and elsewhere in the country during February didn't help the situation.
‘Severe below-freezing winter weather likely had an impact on sales, as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country,’ Yun adds.
At the end of February, there were about 1.89 million existing homes available for sale, about a 4.6-month supply at the current sales pace. That's up 1.6% compared to January but down 0.5% compared to February 2014.
As usual, the big unknown is interest rates:
‘With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages,’ adds Yun.
First-time home buyers represented about 29% of all buyers in February – up from 28% in January and marking the first increase since November 2014.
All-cash sales were 26% of transactions, down from 27% in January and down 35% compared to February 2014. For the month, 67% of investors paid cash.
Distressed sales – including foreclosures and short sales – represented 11% of sales in February, unchanged for the third consecutive month and down from 16% a year ago.
Of those, about 8% were foreclosures and about 3% were short sales.
For more, including a breakdown of single-family and condo/co-op sales, as well as a breakdown of sales by region, click here.