Unexpected Surge in February Home Sales Signals Robust Market Amid Rising Prices

📝 SUMMARY: In an unexpected turn, existing home sales in February surged by 9.5% from January, reaching a seasonally adjusted annualized rate of 4.38 million units, as reported by the National Association of Realtors (NAR). This increase, the largest monthly gain since February of the previous year, came as a surprise to housing analysts who had anticipated a slight decrease in sales. The rise was particularly pronounced in the West and South, where sales jumped 19.4% and 16.4%, respectively, while the Northeast saw no change.

Lawrence Yun, NAR's chief economist, attributed this growth to an increase in housing supply meeting market demand, alongside steady rises in population and job growth. However, he noted that the timing of home purchases would largely depend on mortgage rates and the availability of inventory. Inventory levels did improve, with a 10.3% year-over-year increase to 1.07 million homes available by the end of February, yet this still represents a relatively low 2.9-month supply at the current sales pace.

The median price of homes continued its upward trajectory, increasing by 5.7% from the previous year to $384,500, marking the eighth consecutive month of annual gains. The competitive market led to 20% of homes selling above their listed price. Despite the overall surge in home sales, the proportion of first-time buyers dipped to 26% in February, down from 28% in January and well below the historical norm of around 40%. In contrast, all-cash sales rose to 33%, up from 28% the year prior, indicating a shift in buying patterns, possibly influenced by high home prices and the stock market.

Yun suggested that the influx of buyers from more expensive states like California to more affordable markets such as Florida or Georgia, often paying in cash, reflects a broader acceptance of the "new normal" for mortgage rates, which have recently exceeded 7%. This landscape presents a mixed picture of the housing market, with increased sales and prices signaling robust demand and competition, yet challenges remain for first-time buyers and affordability.

🔍 SOURCE: https://www.cnbc.com/2024/03/21/february-2024-home-sales-spike.html