Existing home sales jumped +11.8% from one month to the next in February 2019, according to the National Association of REALTORS® (NAR). Despite this record monthly jump (four times the usual monthly change in one direction or the other) sales were still down -1.8% y/y.
Real estate agents around the country credited dropping mortgage interest rates as well as dropping home prices (just a +3.2% increase in February 2019, according to NAR, the smallest annual gain in several years) for the increase in demand.
Lawrence Yun, NAR’s chief economist said, “A powerful combination of lower mortgage rates, more inventory, rising incomes and higher consumer confidence were driving the sales rebound. Consumers are very sensitive to mortgage rates, at least that’s what we’re finding out. So as mortgage rates began to drop, there was evidently a strong pent-up demand.”
Cheryl Young, senior economist with Trulia, agreed. “…sliding mortgage rates and moderating home prices will continue to boost demand and drive sales…and…with the Feds…signaling a dovish outlook of the economy…mortgage rates show no signs of picking up anytime soon.”
While median sales jumped y/y for the 84th month in a row, inventory increased +3.2% in February 2019 to 1.63M units. Unsold inventory continues to stand at a 3.5-month supply.
Existing home sales at entry level pricing remained relatively flat as single-family builders have not ramped up their inventory at this price point. Higher end home sales decreased -6% in February 2019 likely due to tax code changes that removed long-standing deductions.
So, how does it look for the spring selling season?
According to Danielle Hale, Realtor.com’s economist, “ For-sale homes are staying on the market longer after years of frenzied home buying and price cuts on listed homes are on the uptick. But, still-high home prices and relatively low inventory will continue to present affordability pressures, especially for first-time buyers.”
Thanks for statistics source references in articles in HousingWire and CNBC.