Existing home sales unexpectedly rose in February as affordability hit its best level in nearly four years and first-time buyers surged into the market.
Sales rose 1.7 percent from January to a seasonally adjusted annual rate of 4.09 million units, the National Association of Realtors reported Tuesday. This was well above the 3.88 million analysts had forecast.
First-time buyers represented 34 percent of February purchases, up from 31 percent in both January and a year ago, matching the highest share in five years. The surge suggests that buyers who had been frozen out by years of high rates and elevated prices are finally finding their way back into the market.
The headline number masked an even stronger story in the segment that matters most to American families. Single-family home sales rose 2.5 percent on the month, driving the overall gain while condo sales declined.
The sales beat came as housing affordability reached its best level in nearly four years. The NAR’s Housing Affordability Index rose to 117.6 in February, the highest reading since March 2022, as mortgage rates fell to 6.05 percent — a full percentage point below where they stood a year ago — and wage growth continued to outpace home price appreciation by nearly four percentage points.
“Housing affordability is improving, and consumers are responding,” said NAR Chief Economist Lawrence Yun.
Yun noted that despite the monthly gain, demand remains below what economic fundamentals would suggest. “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.”
The median existing-home price rose just 0.3 percent year-over-year to $398,000, marking the 32nd consecutive month of annual price gains but one of the smallest increases since the pandemic housing boom. Inventory rose 4.9 percent from a year ago to 1.29 million units, the most for any February since 2020, representing 3.8 months of supply.
Read the full article here