October 6, 2022

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Existing home sales fall in February

Existing home sales fall in February

Home buying activity faded in February.

Existing home sales fell 7.2% to 6.02 million seasonally adjusted units in February from the previous month, according to National Association of Realtors (fire). The number of sales was down 2.4% from the same month a year ago. January home sales numbers were revised down slightly to 6.49 million from 6.5 million. The results came in well above analysts’ expectations for a 6.2% month-on-month decline to 6.1 million units, according to Bloomberg estimates.

“The recent drop has been larger than usual,” said Lawrence Yun, chief economist at NAR, noting that anything above 5% is considered a big swing.

Sales declined in all four regions of the United States, with the Northeast and Midwest leading the declines, recording 11.5% and 11.3%, respectively. Sales fell 5.1% in the South and 4.7% in the West.

The drop in actual home sales shouldn’t come as a surprise considering Pending home sales decline in the first month of this year And two months ago. Pending home sales, a leading indicator of the housing market, indicate when buyers first sign contracts. Therefore, the actual sale of the house usually takes place at least a month later.

“In one fell swoop, this will bring sales back in line with mortgage application numbers, allowing for the usual lag, as the following chart shows,” Pantheon Macroeconomics said in a research note ahead of the results. “It’s possible that January pending sales fell due to bad weather and the Omicron wave, but any recovery will be short, given the downward trend in mortgage demand.”

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The median existing home price for all home types in February rose 15% to $357,300, up 15.0% from February 2021, with prices growing in each area. This represents 120 consecutive months of annual increases, the longest on record.

“After 10 consecutive years of home price increases, the median current US home sales price has more than doubled the median $155,600 in February 2012 when home prices started their streak,” Danielle Hill, chief economist at Realtor.com said in a press release. Present”.

“Housing affordability remains a major challenge, with buyers facing a double whammy: high mortgage rates and ongoing price increases,” Yoon said. “Some who previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate.”

This week, the 30-year fixed rate mortgage, which is most popular for buyers, It jumped to 4.16%, up from 3.85% a week ago, according to Freddie Mac. This is the highest level since May 2019.

According to Yun, at current interest rates, monthly mortgage payments to first-time homebuyers increased 28% over last year.

“As widely expected by consumers Fed rate hike this week“They had a strong incentive to act quickly on listed homes when new offers were introduced and to pursue pending deals,” Hill said.

First-time buyers were responsible for 29% of sales in February, up from 27% in January and 31% in February 2021. It’s still below historical standards of 30% to 40%, Yoon noted.

Stock shortages continue to drive prices north. The home inventory at the end of February totaled 870,000 units, up 2.4% from January and down 15.5% from a year ago. Unsold inventory remains at 1.7 months supply at the current sales pace, up from January’s record low supply of 1.6 months and down from 2.0 months supply in February 2021.

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Every February, Yoon said, there is a decrease in the number of homes for sale with a slight increase in the spring. He remains optimistic that stock will rebound at the end of the summer given the latest home building activity.

“The recent increase in new home construction will help add much-needed supplies to the market,” Hill said.

US home building rebounded in February to the strongest pace since 2006, according to New data released by the Ministry of Commerce on Thursday. Housing starts jumped 6.8% to a seasonally adjusted annual rate of 1.769 million units last month.

But it will take time for the new stock to reach the market and meet the ongoing demand. Despite a dip in activity last month, existing home sales still outpaced pre-pandemic activity, which is about 5.5 million homes per month.

“It’s still hard to buy. There are so many offers [on homes]”Mortgage rates are on the rise, and it will be interesting to see what happens in the coming months,” Yoon said.

Amanda Fong is an editor at Yahoo Finance. Follow her on Twitter: Tweet embed

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