LOS ANGELES (AP) — Sales of previously occupied U.S. homes jumped in February at the fastest pace in six months as buyers took advantage of a slight drop in mortgage rates. The country’s median price also fell slightly, its first annual decline since 2012.
Sales of existing homes jumped 14.5% last month from January to a seasonally adjusted annual rate of 4.58 million, the National Association of Realtors said Tuesday. That’s the fastest selling pace since September and higher than 4.2 million economists expected, according to FactSet.
The surge in sales – the largest on record since 1999 – ended a 12-month slump that plunged the country’s housing market into its deepest slump in nearly a decade and left January sales at slowest pace in over a dozen years.
Still, sales fell 22.6% last month from February last year, a sign that many potential buyers are staying out of the market after years of rising prices and significantly higher mortgage rates than ever before. one year ago.
The average long-term rate on a 30-year mortgage hit a two-decade high of 7.08% in the fall. Rates eased in December and January, and slipped to just above 6% in early February.
“Aware of mortgage rate developments, buyers take advantage of any rate cuts,” said Lawrence Yun, NAR’s chief economist. “Additionally, we are seeing greater sales gains in areas where home prices are falling and local economies are creating jobs.”
The national median home price fell 0.2% from February last year to $363,000, marking the first annual decline in 13 years, the NAR said.
Yun forecast U.S. home prices to fall 2% this year, but acknowledged they could just as easily fall or rise 5%, depending on what happens with mortgage rates.
“I think home sales have already bottomed out; unclear on pricing,” he said.
The slight drop in prices is a good sign for buyers as the spring home buying season gathers pace, although affordability remains a formidable hurdle after years of rising home values. The median U.S. home price is still up about 45% since February 2019, according to FactSet.
First-time buyers accounted for 27% of homes sold last month, up from 31% in January.
“Anything below 30% is not good news,” Yun said.
High mortgage rates, which can add hundreds of dollars a month in costs for homebuyers, on top of already high home prices, have kept many potential buyers on the sidelines.
The average rate on a 30-year home loan fell to 6.60% last week, according to mortgage buyer Freddie Mac. A year ago, the rate averaged 4.16%.
Stronger-than-expected reports on the economy this year have fueled expectations that the Federal Reserve may need to keep raising its key borrowing rate to rein in inflation as early as Wednesday, when the central bank is due to wrap up its final policy meeting. .
Investors’ expectations about future inflation, global demand for US Treasuries, and what the Fed does with interest rates can influence mortgage rates. Many economists expect at least three more increases before the end of the year, although some have lowered those expectations due to the banking crisis that has recently unfolded.
Although there are more homes on the market than last year, supply remains near historic lows, which is helping to support home prices. The inventory of homes for sale was unchanged from January, but rose 15.3% from February last year. Some 980,000 homes were on the market at the end of the month. This equates to a 2.6 month supply at the current rate of sale. In a more balanced market between buyers and sellers, there is a 5-6 month supply.
A plus for homebuyers: Properties are staying on the market almost twice as long as they were a year ago. On average, homes sold 34 days after they went on the market in February. That’s up from 33 days in January and 18 days in February last year. Still, 57% of homes sold in February had been on the market for less than a month, according to the NAR.
