Sales of existing homes rebounded in February following weaker sales in January and December
Sales of existing homes rebounded in February following weaker sales in January and December.
The 3% increase in completed transactions reported by the National Association of Realtors, took the seasonally-adjusted annual rate of existing-home sales to 5.54 million. It meant a year-over-year rise of 1.1%.
Despite the low inventory, demand remains strong with NAR chief economist Lawrence Yun noting that sales in January were impacted by the weather conditions in the Northeast and Midwest. The Northeast is also likely to see March sales figures impacted by the weather.
"A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump," he said.
Overall 2018 is underway with strong demand from homebuyers and positive economic fundamentals. However, affordability remains an issue and even the seasonal inventory boost (4.6% year-over-year at the end of February) has not dampened price hikes, especially in the West.
Rising mortgage rates are also impacting affordability and this month’s additional interest rate increase by the Fed will further stretch household budgets.
"Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth," said Yun. "Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings."
