What's happened
Existing home sales in the US rose 4.2% in February, reaching an annual rate of 4.26 million units, according to the National Association of Realtors. Despite this increase, sales fell 1.2% compared to February last year. Meanwhile, mortgage rates have seen slight fluctuations, providing some relief to potential buyers.
What's behind the headline?
Current Trends in the Housing Market
- Sales Recovery: Existing home sales increased by 4.2% in February, indicating a potential recovery as buyers slowly re-enter the market.
- Price Stability: The national median sales price rose to $398,400, marking a 3.8% increase from the previous year, suggesting sustained demand despite higher prices.
- Mortgage Rates: The average rate for a 30-year mortgage rose slightly to 6.67%, but remains below 7%, which is beneficial for buyers.
Implications for Buyers and Sellers
- Increased Inventory: With 1.24 million unsold homes available, buyers have more options, which could lead to a more balanced market.
- Longer Selling Times: Homes are taking longer to sell, averaging 42 days on the market, indicating a shift in buyer behavior and market dynamics.
- Future Outlook: As the spring homebuying season approaches, the combination of stable mortgage rates and increased inventory may encourage more buyers to enter the market, potentially leading to further sales increases.
What the papers say
According to the National Association of Realtors, existing home sales rose 4.2% last month, surpassing economists' expectations. Lawrence Yun, NAR's chief economist, noted, "Home buyers are slowly entering the market," highlighting the impact of increased inventory on pent-up demand. Meanwhile, Freddie Mac reported a slight increase in mortgage rates, with the 30-year fixed-rate mortgage averaging 6.67%, up from 6.65% the previous week. This trend is seen as a modest relief for potential buyers, as noted by Sam Khater, Freddie Mac's chief economist, who stated, "The 30-year fixed-rate mortgage has stayed under 7% for nine consecutive weeks." In contrast, the South China Morning Post reported on the declining home prices in China, indicating a different trajectory in the global housing market, where new-home prices dropped 0.1% month-on-month in February. This contrast underscores the varying conditions in different markets, with the US showing signs of recovery while China continues to struggle.
How we got here
The US housing market has faced challenges since 2022, primarily due to rising mortgage rates that began climbing from pandemic-era lows. This has led to a significant decline in home sales, reaching their lowest levels in nearly 30 years. Recent trends indicate a slight recovery as inventory increases and mortgage rates stabilize.
Go deeper
- What factors are influencing home prices?
- How do current mortgage rates compare to last year?
- What does the increase in inventory mean for buyers?
Common question
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What Factors Are Driving the Recovery in US Home Sales?
The recent uptick in US home sales has raised questions about the housing market's stability and what it means for potential buyers. With existing home sales rising by 4.2% in February, many are curious about the factors contributing to this recovery and how it impacts mortgage rates and buyer sentiment. Below, we explore common questions surrounding this topic.
More on these topics
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The National Association of Realtors, whose member brokers are known as Realtors, is a North American trade association for those who work in the real estate industry.
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Lawrence Yun is a Chief Economist and Senior Vice President of Research at the National Association of Realtors.
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The Federal Home Loan Mortgage Corporation, known as Freddie Mac, is a public government-sponsored enterprise, headquartered in Tysons Corner, Virginia.
