Home sales jump 14.5% in February as prices fall for the first time in a year
Existing home sales spiked 14.5% in February, snapping 12-month streak of declines
Housing market to experience ‘really good’ earnings in late 2023: Jerry Howard
National Association of Home Builders CEO Jerry Howard surveys the state of the housing market as the U.S. economy continues to grapple with inflation on ‘Varney & Co.’
U.S. existing home sales rose for the first time in a year in February as buyers rushed to take advantage of a decline in mortgage rates, according to a National Association of Realtors report released Tuesday.
Sales of previously owned homes climbed 14.5% in February from the prior month to an annual rate of 4.58 million units, snapping a 12-month losing streak. On an annual basis, existing home sales are still down 22.6% when compared with February 2022.
"Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines," Lawrence Yun, the chief economist at NAR, said in a statement. "Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs."
ONE YEAR INTO ITS INFLATION FIGHT, THE FED FACES A MURKY FUTURE
Homes in Rocklin, California, US, on Tuesday, Dec. 6, 2022. ( Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)
The average rate on a 30-year fixed mortgage fell to 6.09% at the beginning of February before beginning to trend higher, according to data from Freddie Mac, the lowest level since September. Rates are currently around 6.6%, compared to about 4.16% just one year ago.
For months, higher mortgage rates have dampened consumer demand and brought down home prices. In February, for the first time in a record 131 straight months – about 11 years – home prices posted an annual decline, falling 0.2% from the same time one year ago. The median price of an existing home sold in February was $363,000, down from $363,700 in 2022.
There were about 980,000 homes for sale at the end of February, according to the report, unchanged from January and up about 15.3% from one year ago. Homes sold on average in about 34 days, up from 33 days in January and 18 days one year ago. Before the pandemic, homes typically sat on the market for about a month before being sold.
MORTGAGE RATES POST BIG DECLINE AMID SVB FALLOUT
At the current pace of sales, it would take roughly 2.6 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level.
At the current pace of sales, it would take roughly 2.9 months to exhaust the inventory of existing homes. Experts view a pace of six to seven months as a healthy level. (Jeremy Erickson/Bloomberg via Getty Images / Getty Images)
"Inventory levels are still at historic lows," Yun said. "Consequently, multiple offers are returning on a good number of properties."
GET FOX BUSINESS ON THE GO BY CLICKING HERE
The interest rate-sensitive housing market has borne the brunt of the Federal Reserve's aggressive campaign to tighten policy and slow the economy.
Policymakers already lifted the benchmark federal funds rate eight consecutive times and are widely expected to approve a ninth hike at the conclusion of their two-day meeting on Wednesday amid signs of stubborn inflation.