US Existing Home Sales Unexpectedly Surge in February, Far Exceeding Expectations

Despite mortgage rates remaining at high levels, the sales of existing homes in the United States unexpectedly surged in February, far exceeding expectations.

The latest data released by the National Association of Realtors (NAR) on Thursday, March 20, indicated a month-over-month increase of 4.2% in existing home sales last month, with a seasonally adjusted annual sales rate of 4.26 million units. These figures significantly surpassed general predictions, as industry analysts had previously projected a 3% decline in sales, while economists surveyed by Reuters had forecasted an annual sales rate dropping to 3.95 million units.

Compared to the same period last year, existing home sales in February decreased by 1.2%.

This data is based on transaction volume from contracts signed in December last year and January this year, during which mortgage rates were on the rise. The average interest rate for 30-year fixed-rate mortgages hovered around 7%, whereas the current rates are at around 6%.

NAR’s chief economist Lawrence Yun stated in a press release, “Buyers are slowly entering the market. While mortgage rates have seen minimal changes, more inventory and choices are unlocking pent-up housing demand.”

In February, the inventory of existing homes increased by 5.1% compared to the previous month, reaching 1.24 million units, a 17% increase from the same period last year. The median existing home price in February rose by 3.8% from the previous year to $398,400, setting a record high for the month of February.

At the current sales pace in February, it would take 3.5 months to exhaust the existing housing inventory, higher than the 3.0 months from the same period last year. A supply of 4 to 7 months is considered a balanced market between supply and demand.

Last month, homes typically spent 42 days on the market, compared to 38 days a year ago. First-time homebuyers accounted for 31% of sales, up from 26% a year earlier. Economists and real estate agents note that a robust real estate market requires first-time buyers to make up 40% of purchasers.