Existing-home sales rose 6.5% from January to a seasonally-adjusted annual rate of 5.77 million in February, the National Association of Realtors reported Friday. Of the four major regions, only the Northeast reported a drop in sales, while other areas saw increases, including sizable sales gains in the West.
Overall sales greatly increased year-over-year, up 7.2% from a year ago.
“February’s sales of over 5 million homes were the strongest since February 2007,” said Lawrence Yun, NAR’s chief economist. “I would attribute that to the incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years.”
The median existing-home price for all housing types in February was $270,100, up 8.0% from February 2019 ($250,100), as prices rose in every region. February’s price increase marks 96 straight months of year-over-year gains.
Yun noted that February’s home sales were encouraging but not reflective of the current turmoil in the stock market or the significant hit the economy is expected to take because of the coronavirus and corresponding social quarantines. “These figures show that housing was on a positive trajectory, but the coronavirus has undoubtedly slowed buyer traffic and it is difficult to predict what short-term effects the pandemic will have on future sales,” Yun said.
Total housing inventory at the end of February totaled 1.47 million units, up 5.0% from January, but down 9.8% from one year ago (1.63 million). Unsold inventory sits at a 3.1-month supply at the current sales pace, equal to the supply recorded in January and down from the 3.6-month figure recorded in February 2019.
Properties typically remained on the market for 36 days in February, seasonally down from 43 days in January, and down from 44 days in February 2019. 47% of homes sold in February 2020 were on the market for less than a month.
First-time buyers were responsible for 32% of sales in February, equal to the percentages seen in both January 2020 and in February 2019. NAR’s 2019 Profile of Home Buyers and Sellers – released in late 2019[iv] – revealed that the annual share of first-time buyers was 33%.
“For the past couple of months, we have seen the number of buyers grow as more people enter the market,” Yun said. “Once the social-distancing and quarantine measures are relaxed, we should see this temporary pause evaporate, and will have potential buyers return with the same enthusiasm.”
Yun said he expects home prices to hold up. “Unlike the stock market, home prices are not expected to drop because of the on-going housing shortage and due to homes getting de-listed during this time of crisis,” he said.
Individual investors or second-home buyers, who account for many cash sales, purchased 17% of homes in February, equal to January and up slightly from 16% in February 2019. All-cash sales accounted for 20% of transactions in February, down from both 21% in January and from 23% in February 2019.
Distressed sales – foreclosures and short sales – represented 2% of sales in February, unchanged from January and down from February 2019.
Realtor.com’s Market Hotness Index, measuring time-on-the-market data and listing views per property, revealed that the hottest metro areas in February were Colorado Springs, Colo.; Lafayette-West Lafayette, Ind.; Modesto, Calif.; Rochester, N.Y.; and Sacramento-Roseville-Arden-Arcade, Calif.
According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage decreased to 3.47% in February, down from 3.62% in January. The average commitment rate across all of 2019 was 3.94%.
“In the midst of this national emergency, NAR has been and will continue to be in contact with Congressional leaders and White House officials as they consider various policies to ease the economic impact of the coronavirus,” said NAR President Vince Malta, broker at Malta & Co., Inc., in San Francisco.
Single-family home sales sat at a seasonally-adjusted annual rate of 5.17 million in February, up from 4.82 million in January, and up 7.3% from a year ago. The median existing single-family home price was $272,400 in February, up 8.1% from February 2019.
Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 600,000 units in February, about even with January’s sales, but 7.1% higher than a year ago. The median existing condo price was $249,900 in February, an increase of 7.0% from a year ago.
February 2020 existing-home sales in the Northeast fell 4.1%, recording an annual rate of 700,000, a 2.9% increase from a year ago. The median price in the Northeast was $295,400, up 8.2% from February 2019.
Existing-home sales increased 0.8% in the Midwest to an annual rate of 1.29 million, up 4.0% from a year ago. The median price in the Midwest was $203,700, a 7.9% increase from February 2019.
Existing-home sales in the South climbed 7.2% to an annual rate of 2.52 million in February, up 8.2% from the same time one year ago. The median price in the South was $238,000, an 8.2% increase from a year ago. Existing-home sales in the West surged 18.9% to an annual rate of 1.26 million in February, an 11.5% increase from a year ago. The median price in the West was $410,100, up 8.1% from February 2019.
Joel Kan, associate VP of economic and industry forecasting at the Mortgage Bankers Association, analyzed the Realtors’ report: “Existing-home sales increased to a solid annual pace in February to 5.8 million. This was the strongest sales pace since February 2007, and another indicator of housing market health before the current coronavirus turmoil. The unadjusted sales figure was more than 7% higher than a year ago, and was also the third straight year-over-year increase. February’s sales activity was in line with purchase applications data from our Weekly Applications Survey, showing strong growth to start 2020. The drop in overall economic activity and the recessionary outlook due to the coronavirus will adversely impact home sales in the coming months, offsetting some of this pre-crisis momentum, which was fueled by a strong job market and lower mortgage rates.”
