Single-family homes are seen in this aerial photo taken as part of a Lennar Corp. development. from San Diego, California.
Bing Guan | Bloomberg | Getty Images
Closed sales of existing homes in February fell 6.6% more than expected compared to January, according to the National Association of Realtors.
This put them at a seasonally adjusted annualized rate of 6.22 million units, which was 9.1% higher compared to February 2020.
Despite being at the top of the historic spring real estate market, homeowners are not listing their properties for sale at the rate they would normally do at this time of year. The supply of houses for sale decreased by 29.5% year-on-year, the biggest annual decline, to 1.03 million houses.
At the current rate of sales, it would take two months for this offer to run out. A year ago, there was a three-month offer, which is also considered low.
This limited supply continues to fuel house prices, which were 15.8% higher in February year-on-year. The average price of an existing house sold during the month was $ 313,000. This is the highest price recorded in February. Prices are rising due to house bidding wars, but the median has also been tilted as more sales occur at the top end of the market.
Home sales at prices over $ 1 million were 81% higher than a year ago. Homes priced between $ 100,000 and $ 250,000 fell 11 percent.
“The fact that even with declining sales, market days are fast and prices are rising,” said Lawrence Yun, chief economist for real estate agents. “This means that it is not due to the disappearance of market demand, it is really the lack of supply.”
Houses are also selling at the fastest rate. The average number of days on the market has dropped to just 20.
Buyers in February also faced higher mortgage rates than at the end of last year, which reduced their purchasing power. The average 30-year fixed-rate mortgage fluctuated around 2.8% in January, according to Mortgage News Daily. Then it started to grow steadily in February, reaching 3.27% by the end of the month. However, those who closed houses in February would probably have blocked their tariffs in January.
“Already this year, the monthly cost of a $ 300,000 loan is up $ 70,” said Danielle Hale, chief economist for realtor.com. “Looking ahead, the large and growing cohort of consumers reaching the primary age of home purchase will maintain high interest, but whether buyers can translate this desire into ownership will depend on whether buyers’ incomes increase with economic growth, buyers are willing to let housing costs take up more of their monthly budgets or if more homes for sale help slow down the rise in house prices. “
Home builders continue to face headwinds toward faster production, such as higher costs for land, labor and materials, as well as supply chain delays. The start of single-family homes was lower in February than expected, but some of this could be related to the harsh winter weather in the south.
At the regional level, sales of existing homes fell 11.5% month-on-month in the Northeast. They decreased by 14.4% in the Midwest and were 6.1% lower in the South. The West was the only region to record a monthly gain of 4.6%.