Sales fell 7.1% in February from the prior month to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said Monday.
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The NAR cited “unshakably low supply levels and steadfast price growth” as the main factors contributing to the drop in existing home sales.
Lawrence Yun, the association’s chief economist, called February’s numbers a “meaningful slowdown”, but said that the 5.25 million average for January and February was comparable to the same period a year ago. “Finding the right property at an affordable price is burdening many potential buyers”. The median home price fell to $210,000, the lowest in a year, notes Peter Boockvar of The Lindsey Group.
In the Midwest, existing home sales decreased 13.8%, to an annual rate of 1.12 million, in February and are now equal to February 2015 sales. The decline follows robust yearly sales rates of 5.47 million in January and 5.45 million in December, after a new regulation had delayed closings in November. Investors have also turned homes into rentals, further depriving the market of supplies. All-cash sales were 25 percent of transactions in February, down from 26 percent both in January and a year ago. That is a slight increase from January’s 4.0 months. First-time buyers made up 30 percent of purchases, staying persistently below their historic share of 40 percent. “While the Dow Jones Industrial average, S&P index, and NASDAQ, have some very recent gains, the market had been mostly sluggish in January and February”.
Sales fell dramatically in the Northeast, dropping 17.1% from the prior month to an annual rate of 630,000. “Already facing affordability issues, this competition at the entry-level market only adds to the roadblocks slowing first-time buyers”, he said. Housing inventory increased by 3.3% in February to 1.88 million homes, which is equal to a supply of 4.4 months, an increase from 4.0 months in January. As the labor market continues to generate job growth and income growth gradually accelerates, we expect that overall housing activity will gradually improve. The median existing single-family home price was $212,300 in February, up 4.3 percent from February 2015. In January the national median price was $213,800.
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Still, sales have been aided over the past year by hiring that has pushed unemployment to a healthy 4.9 percent.
