Existing Home Sales Plummet -6.6% from January to February

Key Highlights

• Home Sales Dropped -6.6% from January to February, according to new data from National Association of REALTORS® (NAR)
• Multiple causes include soaring home prices, historically low inventory and rising mortgage rates 

Latest Data Indicates Decrease of -6.6% in Existing Home Sales from January to Februar

In its latest data release, the National Association of REALTORS® (NAR)  indicated that sales of existing homes fell -6.6% in the one month from January to February 2021.  Even with this harsh decline, existing home sales during this period continued to outperform last year’s sales rate by +9.1%.

Lawrence Yun, NAR’s chief economist, said, “Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels.”

Cause and Effect of Historically Low Inventory

The national inventory total of for-sale resale homes in February remained constant with those in January, 1.03M units.  But, these 1.03M units of for-sale resale homes in both January and February represent an inventory loss of -29.5% below last year’s total.  There is only a 2 months supply of unsold inventory available for buyers to consider purchasing at the current sales pace.

The result, or the effect, of such historically low for-sale resale inventory is stiff competition for those houses from seemingly insatiable buyer demand. The lower the inventory, the stiffer the competition.  The stiffer the competition, the higher the prices.

The median existing-home price for all housing types nationwide in February hit $313,000, an increase of +15.8% y/y.  Despite this year-over-year price increase of +15.8%, homes are selling on average in just 20 days after being listed.

Will Rising Home Prices and Rising Mortgage Rates Dampen the Booming Housing Market in 2021

Yun, NAR’s chief economist, believes that continued rising home prices and mortgage rates above 3% could raise affordability concerns among potential buyers and slow the market. However, he expects the 2021 housing market to overtake 2020 sales levels

Yun said, “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.  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.”

Thanks to the National Association of REALTORS®, National Public Radio and Inman.

URGENT: 2021 Results Released. New FREE On-Line Web Event Reveals 17 Surprising Secrets Of The Top 100 Millionaire Agents. Get Your FREE Spot For The On-Line Webinar Now. When You Attend This Event You Will Have A Sense Of Relief Knowing You Can FINALLY Laugh At Your Money Worries – If You Follow This Simple Plan. Learn How To Generate 100’s of Motivated Leads Without Coming Off As A Pushy Salesperson and Losing Your Soul. Learn Now How To Become One of the 1000s of Agents Making HUGE Money NOW Who Never Thought They Could.