February Existing Home Sales: Mounting Headwinds

• 6.02 million existing homes were sold in February (SAAR), down 7.2% from January and down 2.4% from February 2021, according to the National Association of Realtors (NAR).
• Total housing inventory at the end of February amounted to 870,000 units, NAR said, up 2.4% from January and down 15.5%% from one year ago.
• The median existing-home price for all housing types in February was $357,300, up 15.0% from February 2021.

February’s drop in existing home sales is likely the result of headwinds provided by low inventory and worsening affordability. The market facing home shoppers this winter has been unseasonably hot – there are about half as many homes for sale as there were two years ago, and those that find their way onto the market are typically selling in less than two weeks. Moving into spring, it’s likely that competition between buyers will only continue to intensify. And low inventory levels are likely to persist: The flow of  homes coming onto the market has been slower than we typically see at this time of year. What’s more, enduring home value growth and the recent surge in mortgage rates has pushed monthly mortgage payments up at their fastest pace in decades. But while conditions are increasingly daunting for buyers, the sales market overall has not – yet – been meaningfully dented by souring conditions. Last year was the best year for sales in a generation, and this year is expected to be at least as strong. Thousands of buyers are finding ways to get deals done every day, as the long-time financial and social advantages of homeownership continue to entice buyers of all ages – especially aging millennials – into the market.