In January and early February, mortgage rates fell from the mid-6% range to the low 6% and even high 5% ranges, encouraging homebuyers who were now sitting on the fence to buy .
In addition to lower mortgage rates, home buyers who closed sales on existing homes in February also saw a slight decrease in the median sale price, which fell 0.2% year over year to $363,000. The reduction ends a streak of 131 consecutive months of annual price increases. This is the longest streak on record.
“Home prices fell in February, the first year-over-year decline in the national median home price in more than two decades,” Lisa Sturtevant, Bright MLS’ Chief Economist said in a statement. “Higher mortgage rates have reduced the purchasing power of buyers and prices have been affected. But the price drop has been modest, and a lack of supply has kept prices rising in many housing markets.”
Although the pace of sales picked up in February, the number of days a home typically spent on the market increased from 33 days in January to 34 days, up 18% from a year earlier. Overall, 57% of homes sold in February were on the market for less than a month.
While an increase in the pace of sales is certainly good news for the real estate industry, it is not as good for the continuing issues with low inventory. The number of existing homes on the market remained unchanged from January at 980,000, representing 2.6 months’ supply at the current sales pace. But despite the lower levels of inventory, the number of homes currently on the market is still up 15.3% from a year ago.
“Inventory levels are still at historic lows,” Yun said. “As a result, many offers are returning on a good number of properties.”
Regionally, existing home sales increased month-over-month in all four regions, with the West recording the largest monthly increase of 19.4% in sales momentum of 860,000 homes. The South (annual rate of 2.11 million) posted the second highest monthly growth of 15.9%, followed by the Midwest (annual rate of 1.09 million) at 13.5% and the Northeast (annual rate of 520,000) at 4.0%.
Despite posting the biggest month-on-month jump, West still posted the highest annual decline in sales rates since February 2022, down 28.3%.
