The nationwide inventory shortage finally caught up with existing-home sales figures in February. According to the National Association of Realtors, completed transactions of single-family homes, townhomes, condominiums and co-ops declined 6.6 percent to a seasonally adjusted annual rate of 6.22 million units in February.
Despite the slowdown in sales compared to January levels, homebuying activity in February was 9.1 percent higher than the same period last year. The cold snap that swept a large part of the country could have also depressed sales last month as prospective buyers stayed home and sellers delayed listing their properties.
“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,” said Lawrence Yun, NAR’s chief economist. “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.”
February’s median existing-home price for all housing types was $313,000, up 15.8 percent year-over-year. All four regions of the country experienced annual price gains, surging 20.6 percent in the West, 20.5 percent in the Northeast, 14.2 percent in the Midwest and 13.6 percent in the South. Home sales totals dropped in every region except the West, where closed transactions rose 4.6 percent with a median sale price of $493,300.
The average 30-year fixed-rate mortgage ticked up to 2.81 percent in February compared to 2.74 percent in January, according to Freddie Mac, worsening affordability for would-be buyers. At the end of the month, total housing inventory amounted to 1.03 million units, unchanged from January, representing a 29.5 percent decline from year-ago levels.
Unsold inventory hit two months of supply, a slight improvement over January’s 1.9-month amount, but lagging far behind February 2020’s 3.1-month supply. The typical home spent 20 days on the market, which was one day faster than the previous month and 16 days faster than the year prior. A whopping 74 percent of the homes that sold in February went from ‘active’ to ‘pending’ in under a month.
When broken down by housing type, single-family home sales dipped 6.6 percent month-over-month, while condo and co-op sales fell 6.7 percent. That being said, both segments of the residential market were up 8.0 percent and 18.6 percent, respectively, from one year ago.
Yun, who attributed February’s declining sales totals to a dearth of supply, noted that “an increase in inventory is the best way to address surging home costs.” Hopefully, warmer temperatures and rising vaccination rates will lead to improved conditions for spring season buyers in search of a new home.