Existing home sales surge in February

Summary

Buyers jump on lower mortgage rates in February

• Existing home sales surged 14.5% in February to a 4.58 million-unit pace, the largest month-over-month increase since December 2015, excluding the pandemic era.
• The reading surpassed consensus expectations for a solid 5.0% increase. Lower mortgage rates early this year drove a turnaround in mortgage applications for purchase and pending home sales, which presaged the surge in resales.
• Single-family resales drove most of the jump. Sales climbed 15.3% to 4.14 million-unit annual pace during the month, ending 12 straight months of declines.
• The rebound in existing home sales was broad-based with all four regions recording increases. Sales jumped 19.4% and 15.9% in the West and South, respectively. Resales in the Midwest grew 13.5% while the Northeast grew at a slower 4.0%.
• Nationally, home prices declined over the year in February. The median existing single-family home price dropped 0.7%, the first year-over-year decline since February 2012.
• Regionally, home price appreciation was mixed. On a year-over-year basis, the median existing single-family home price rose in the South (+2.0%) and Midwest (+5.0%) and declined in the Northeast (-6.0%) and West (-6.0%).
• Inventory remains depressed with total unsold inventory unchanged over the month at 980K units. This amounts to 2.6 months of supply at the current sales pace, down from 2.9 months in January.
• Homes spent an average of 34 days on the market, up from 33 in January 2023 and 18 days in February 2022.
• Buyers took advantage of falling mortgage rates in February, however, mortgage rates have trended higher more recently. So far in March, the 30-year fixed mortgage rate has averaged 6.7%, up from 6.3% in January and February. Strains in the banking system appear to be keeping mortgage rates elevated despite lower bond yields in recent days.
• Even with the reversal in financing costs, improved affordability conditions may still bolster sales throughout the spring selling season. For more detailed insights into our forecast, please see our 2023 housing market outlook.

Download The Full Economic Indicator