The existing home sales rollercoaster ride continues. After jumping 6.7% in January, rebounding from 4.6% drop in December, existing home sales were again down in February, dropping 7.2% from the month prior to a seasonally adjusted rate of 6.02 million, according to a report from the National Association of Realtors released Friday.
The February sales pace is also down 2.4% compared to a year ago.
“It is tempting to blame the decline on the recent run-up in mortgage rates,” MBA SVP and chief economist Mike Fratantoni said in a statement. “However, given that last month’s sales numbers represent closings, the decline in sales came at a time earlier this year when rates were lower. The more likely reasons for the drop in sales were the ongoing lack of housing inventory and the resulting increase in home values that priced some buyers out of the market.”
The median existing-home sales price was $357,300 in February, up 15% year over year. This marks the 120th consecutive month of annualized home price increases, the longest running streak on record.
However, while the inventory of unsold existing homes remains low, there was a slight increase in February. At the end of the month, 870,000 homes remained on the market, equivalent of 1.7 months of supply at the current month sales pace. This is a 2.4% increase from January, but inventory remains 15.5% below the level it was a year ago.
“The flow of homes coming onto the market has been slower than we typically see at this time of year,” Zillow’s economic data analyst Dan Handy said in a statement.
While inventory levels increased slightly in February, the typical number of days on market dropped by one day to 18 days, with 84% of homes sold in February 2022 sitting on the market for less than a month, according to the report
Despite all of the challenges they are facing, the share of first-time homebuyers rose from 27% in January to 29% in February, but it is still below the 31% share recorded a year ago.
“As we have emphasized, the strength of the 2022 housing market is dependent upon the wave of millennial homebuyers reaching peak first-time homebuyer age and finding a way into this booming housing market,” Fratantoni said in a statement. “We are hopeful that the small increase in inventory and slight slowing of home price growth seen in February will continue through this spring buying season.”
Regionally, existing home sales recorded month-over-month decreases in all four major U.S. regions with the Northeast seeing the largest drop at 11.5%, followed by the Midwest at 11.3%, the South at 5.1% and the West at 4.7%. Compared to a year ago, every region saw a decrease in existing home sales, except for the South which recorded a 3.0% increase.