After starting the year at the fastest pace in almost a decade, existing-home sales dropped 3.7% to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January, the National Association of Realtors reported Wednesday. February’s sales pace remained 5.4% ahead of a year earlier.
The median existing-home price for all housing types in February was $228,400, up 7.7% from February 2016 ($212,100). February’s price increase was the fastest since last January (8.1%) and marks the 60th consecutive month of year-over-year gains.
Single-family home sales declined 3.0% to a seasonally adjusted annual rate of 4.89 million in February from 5.04 million in January, and are now 5.8% above the 4.62 million pace a year ago. The median existing single-family home price was $229,900 in February, up 7.6% from February 2016.
Existing condominium and co-op sales descended 9.2% to a seasonally adjusted annual rate of 590,000 units in February, but are still 1.7% higher than a year ago. The median existing condo price was $216,100 in February, 8.2% above a year ago.
February existing-home sales in the Northeast slumped 13.8% to an annual rate of 690,000, but are still 1.5% above a year ago. The median price in the Northeast was $250,200, which is 4.1% above February 2016.
In the Midwest, existing-home sales fell 7.0% to an annual rate of 1.20 million in February, but are still 2.6% above a year ago. The median price in the Midwest was $171,700, up 6.1% from a year ago. The South rose 1.3% to an annual rate of 2.34 million, and are now 5.9% above February 2016. The median price in the South was $205,300, up 9.6% from a year ago. The West decreased 3.1% to an annual rate of 1.25 million but are 9.6% above a year ago. The median price in the West was $339,900, up 9.6% from February 2016.
Lawrence Yun, NAR chief economist, said closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
Added Yun, “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”
Total housing inventory at the end of February increased 4.2% to 1.75 million existing homes available for sale, still 6.4% lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).
All-cash sales were 27% of transactions in February (matching the highest since November 2015), up from 23% in January and 25% a year ago. Individual investors, who account for many cash sales, purchased 17% of homes in February, up from 15% in January but down from 18% a year ago. 71% of investors paid in cash in February, the highest percentage since April 2015.
First-time buyers accounted for 32% of sales in February, down from 33% in January but up from 30% a year ago. NAR’s 2016 Profile of Home Buyers and Sellers – released in late 20164 – revealed that the annual share of first-time buyers was 35%.
“The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” said Yun. “Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage inched up in February to 4.17% from 4.15% in January. The average commitment rate for all of 2016 was 3.65%.
Properties typically stayed on the market for 45 days in February, down from 50 days in January and considerably more than a year ago (59 days). Short sales were on the market the longest at a median of 214 days in February, while foreclosures sold in 49 days and non-distressed homes took 45 days. Forty-two percent of homes sold in February were on the market for less than a month.
Inventory data from realtor.com® reveals that the metropolitan statistical areas where listings stayed on the market the shortest amount of time in February were San Jose-Sunnyvale-Santa Clara, Calif., 23 days; San Francisco-Oakland-Hayward, Calif., 27 days; Vallejo-Fairfield, Calif., 33 days; Seattle-Tacoma-Bellevue, Wash., 36 days; and Boulder, Colo., at 37 days.
Distressed sales – foreclosures and short sales – were 7% of sales for the third straight month in February, down from 10% a year ago. 6% of February sales were foreclosures and 1% were short sales. Foreclosures sold for an average discount of 18% below market value in February (14% in January), while short sales were discounted 17% (10% in January).
