• Existing home sales lifted by 4.2% in February to a seasonally adjusted annual rate (SAAR) of 4.26M. That’s a 1.2% drop from February 2024, according to the National Association of Realtors (NAR).
• Total housing inventory at the end of February increased to 1.24 million units up from 1.18 million units in January, up 17% from a year ago.
• The median existing-home sales price in February was $398,400, up 3.8% from a year ago.

What happened: In February, the seasonally adjusted annual rate of existing home sales reached 4.26M – 1.2% lower than last February despite both months averaging similar mortgage rates. 

This disappointing volume of existing home sales is expected to be short-lived. Previous months have demonstrated that buyers and sellers are sensitive to mortgage rates. After pushing up towards 7% in late January and early February, rising uncertainty in the broader economy has since driven mortgage rates back below levels seen at the start of the last home shopping season.

However, the combination of rising inventory and falling sales – despite comparable mortgage rates – is a signal that buyers are increasingly cautious. Many may be waiting for list prices to fall, confronting insurance costs, or seeking to build up larger down payments to avoid burdensome mortgage payments. And the latter is not easy. Savings rates remain at record lows as households continue to grapple with high prices in not just housing, but consumer goods in general.  

Today’s NAR existing home sales release was stronger than the annual 5.8% seasonally adjusted drop predicted by Zillow’s formal forecasting models, which leverages mortgage rate modeling and a suite of leading indicators such as Zillow’s existing sales count estimates, inventory, pending home sales, and pricing signals. Seen below are the non-seasonally adjusted estimates from both NAR and Zillow with their respective forecasts. Zillow expects NAR existing sales volume to recover, ending 2025 with only 1.1% more existing home sales than 2024 – a slower recovery than anticipated at the start of the year.