Existing-home sales dipped in February, continuing a seesawing pattern of gains and declines over the last few months, according to the National Association of Realtors' monthly report.
Each of the four major U.S. regions saw sales of existing homes fall on a month-over-month basis in February. Year-over year sales activity was also down overall, though the South experienced an increase while the remaining three regions reported drops in transactions.
Total existing-home sales — completed transactions that include single-family homes, townhomes, condominiums, and co-ops — fell 7.2% from January to a seasonally adjusted annual rate of 6.02 million in February. Year-over-year, sales decreased 2.4% from 6.17 million in February 2021.
"Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases," Lawrence Yun, NAR's chief economist, said. "Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate.
"Monthly payments have risen by 28% from one year ago — which interestingly is not a part of the consumer price index — and the market remains swift with multiple offers still being recorded on most properties,” he said.
Inventory Up Slightly
Total housing inventory at the end of February totaled 870,000 units, up 2.4% from January but down 15.5% from a year ago. Unsold inventory sits at a 1.7-month supply at the current sales pace, the NAR said, up from the record-low supply in January of 1.6 months and down from 2.0 months in February 2021.
Yun noted that rising rates and escalating prices have prevented many consumers from making a purchase.
"The sharp jump in mortgage rates and increasing inflation is taking a heavy toll on consumers' savings," he said. "However, I expect the pace of price appreciation to slow as demand cools and as supply improves somewhat due to more home construction."
The median existing-home price for all housing types in February was $357,300, up 15% from $310,600 in February 2021, as prices grew in each region. This marks 120 consecutive months of year-over-year increases, the longest streak on record.
Properties typically remained on the market for 18 days in February, down from 19 days in January and 20 days in February 2021. According to NAR, 84% of homes sold in February 2022 were on the market for less than a month.
First-time buyers were responsible for 29% of sales in February, up from 27% in January but down from 31% in February 2021. NAR's 2021 Profile of Home Buyers and Sellers — released in late 2021 — reported that the annual share of first-time buyers was 34%.
Individual investors or second-home buyers, who make up many cash sales, purchased 19% of homes in February, down from 22% in January but up from 17% in February 2021. All-cash sales accounted for 25% of transactions in February, down from 27% in January and up from 22% in February 2021.
Single-Family & Condo/Co-op Sales
Single-family home sales jumped to a seasonally adjusted annual rate of 5.35 million in February, down 7% from 5.75 million in January and down 2.2% from a year earlier. The median existing single-family home price was $363,800 in February, up 15.5% from February 2021.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 670,000 units in February, down 9.5% from 740,000 in January and down 4.3% from one year ago. The median existing condo price was $305,400 in February, an annual increase of 10.9%.
"For the past couple of years, buyers have had to contend with a market of high demand, low inventory and a mix of uncertainties with COVID-19 protocols," said NAR President Leslie Rouda Smith, a Realtor from Plano, Texas, and a broker associate at Dave Perry-Miller Real Estate in Dallas. "Consumers are presently challenged with higher mortgage rates, so now, more than ever, interested buyers need the trusted expertise of Realtors® in order to navigate this current market."
Regional Breakdown
Existing-home sales in the Northeast slipped 11.5% in February, registering an annual rate of 690,000, a 12.7% drop from February 2021. The median price in the Northeast was $383,700, up 7.1% from one year ago.
Sales in the Midwest sagged 11.3% from the prior month to an annual rate of 1,330,000 in February, a 1.5% decrease from February 2021. The median price in the Midwest was $248,900, a 7.5% climb from February 2021.
In the South, sales fell 5.1% in February from the prior month, posting an annual rate of 2,790,000, an increase of 3.0% from one year ago. The median price in the South was $318,800, an 18.1% jump from one year prior. For the sixth straight month, the South experienced the highest pace of price appreciation compared to the other regions.
"Employment is vital for housing demand," Yun said. "The Southern states are seeing faster job growth, and consequently, it's the only region to experience a sales gain from a year ago."
Existing-home sales in the West slid 4.7% from the previous month, reporting an annual rate of 1,210,000 in February, down 8.3% from one year ago. The median price in the West was $512,600, up 7.1% from February 2021.
The National Association of Realtors is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries.
