Single-family homes can be seen in this aerial photograph taken in the Lennar Corp. urbanization. in San Diego, California.
Bing Guan | Bloomberg | Getty Images
Closed sales of existing homes fell 6.6% higher than expected in February compared to January, according to the National Association of Realtors.
This placed them at a seasonally adjusted annualized rate of 6.22 million units, 9.1% higher compared to February 2020.
Despite being at the peak of the historically busy spring housing market, homeowners do not publish their properties for sale at the rate they would normally do at this time of year. The supply of homes for sale fell 29.5% year-on-year, the largest annual decline in history, to 1.03 million homes.
At the current rate of sales, it would take two months to exhaust this supply. A year ago, there was a three-month supply, which is also considered low.
This tight supply continues to fuel house prices, which were up 15.8% in February from year to year. The average price of an existing home sold during the month was $ 313,000. This is the highest price recorded in February. Prices are rising due to bidding wars for homes, but the median was also skewed because more sales occur at the upper end of the market.
Home sales with a price in excess of $ 1 million were 81% higher than a year ago. Homes priced between $ 100,000 and $ 250,000 fell 11%.
“The fact that even with falling sales, days in the market are fast and prices are rising,” said Lawrence Yun, chief economist at real estate agents. “This implies that it is not due to the disappearance of market demand, but to the lack of supply.”
Homes are also sold at the fastest rate on record. The average number of days on the market fell to just 20.
February buyers were also facing higher mortgage rates than late last year, which reduced their purchasing power. The average 30-year fixed-rate mortgage rate hovered around 2.8% in January, according to Mortgage News Daily. It then began to rise steadily in February and reached 3.27% by the end of the month. However, those who close homes in February would likely have blocked their rates in January.
“Already this year, the monthly cost of a $ 300,000 loan goes up $ 70,” said Danielle Hale, chief economist at realtor.com. “Looking to the future, the large and still growing cohort of consumers reaching the age of primary home purchase will keep interest high, but whether buyers can translate that desire into ownership will depend on whether buyers’ incomes increase with economic growth, buyers are willing to let housing costs take on a larger share of their monthly budgets or if more homes for sale help slow the pace of house price increases. ”
Home builders continue to face headwinds in faster production, such as higher costs of land, labor and materials, as well as supply chain delays. Single-family housing initiatives were lower in February than expected, but some of them could be related to the harsh winter weather in the south.
At the regional level, sales of existing homes fell 11.5% month-on-month in the Northeast. They fell 14.4% in the midwest and were 6.1% lower in the south. The West was the only region to record a monthly gain of 4.6%.