Existing-home sales declined in February, following two prior months of gains, according to the National Association of Realtors® (NAR). The decline – along with an increase in home prices – directly relate to an all-time low in the number of homeowners opting to put their house on the market.
Month-over-month, only one major U.S. region tracked by NAR saw an increase in February, though all four regions recorded year-over-year gains.
Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – decreased 6.6% from January to a seasonally-adjusted annual rate of 6.22 million in February. But sales climbed year-over-year, up 9.1% from 5.70 million in February 2020.
“Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels,” says Lawrence Yun, NAR’s chief economist.
He cautioned of a possible slowdown in growth in the coming months as higher prices and rising mortgage rates will cut into home affordability.
“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” Yun says. “Many Americans have been saving money, and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”
The median existing-home price for all housing types in February was $313,000, up 15.8% from February 2020 ($270,400). February’s national price jump marks 108 straight months of year-over-year gains.
“Home affordability is weakening,” Yun says. “Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage was 2.81% in February, up from 2.74% in January. The average commitment rate across all of 2020 was 3.11%.
Total housing inventory at the end of February amounted to 1.03 million units, equal to January’s inventory and down 29.5% from one year earlier (1.46 million). Unsold inventory sits at a 2.0-month supply at the current sales pace, slightly up from January’s 1.9-month supply and down from the 3.1-month amount recorded in February 2020. NAR first began tracking the single-family home supply in 1982.
Properties typically remained on the market for 20 days in February, down from 21 days in January and from 36 days in February 2020. Three out of four (74%) homes sold in February 2021 were on the market for less than a month.
First-time buyers made up 31% of February’s sales, down from 33% in January and from 32% in February 2020.
Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in February, up from 15% in January and equal to the percentage from February 2020. All-cash sales accounted for 22% of transactions in February, up from 19% in January and 20% in February 2020.
Distressed sales – foreclosures and short sales – represented less than 1% of sales in February, equal to January’s percentage but down from 2% in February 2020.
Single-family and condo/co-op sales: Single-family home sales decreased to a seasonally adjusted annual rate of 5.52 million in February, down 6.6% from January, and up 8.0% from one year ago. The median existing single-family home price was $317,100 in February, up 16.2% from February 2020.
Existing condominium and co-op sales were at a seasonally-adjusted annual rate of 700,000 units in February, down 6.7% from January and up 18.6% from one year ago. The median existing condo price was $280,500 in February, an increase of 12.3% year-to-year.
Regional breakdown: Compared to one year ago, median home prices increased in each of the four major regions tracked by NAR.
February 2021 saw existing-home sales in the Northeast fall 11.5%, recording an annual rate of 770,000, though it’s a 13.2% increase from a year ago. The median price in the Northeast was $356,000, up 20.5% from February 2020.
Existing-home sales in the Midwest dropped 14.4% to an annual rate of 1,310,000, a 2.3% rise from a year ago. The median price in the Midwest was $231,800, a 14.2% climb from February 2020.
Existing-home sales in the South decreased 6.1%, posting an annual rate of 2,770,000 in February, up 9.9% from the same time one year ago. The median price in the South was $271,200, a 13.6% increase from a year ago.
Existing-home sales in the West rose 4.6% from the month prior, recording an annual rate of 1,370,000 in February, a 12.3% jump from a year ago. The median price in the West was $493,300, up 20.6% from February 2020.