Median existing-home prices in February fell from year-ago levels for the first time in more than a decade, the National Association of Realtors said Tuesday. Home sales, meanwhile, turned around following a year of month-over-month declines.
The median existing-home sold for $363,000—a 0.2% decline compared with February 2022. It was the first time home prices fell nationally from the year prior since February 2012, according to historic data. A similar trend was reflected in February Redfin data, released last week.
Prices differed by category. The median single-family home price was 0.7% below last year’s level, but the median price of condos and co-ops was 2.5% higher than a year prior. Geography also played a part: The median existing-home price in the Northeast and West regions fell a respective 4.5% and 5.6% from one year prior, while those in the Midwest and South gained 5% and 2.7%, respectively.
The seasonally-adjusted annual rate of existing-home sales in February gained 14.5% to 4.58 million—the greatest month-over-month increase since June 2020, and the first such gain since January 2022. The increase represents a recovery from January’s rate of four million, the lowest such reading since October 2010. Despite the month-over-month increase, sales were down 22.6% from the year prior.
Lower mortgage rates in January and February are behind the gain, Lawrence Yun, the association’s chief economist, said on a Tuesday morning call. “Consumers evidently want to take advantage of this lower mortgage rate of 6.3%, rather than close to 7% we were witnessing towards the end of last year,” Yun said.
After rising above 7% in October and November 2022, the average weekly fixed 30-year mortgage rate published by Freddie Mac fell as low as 6.09% in early February.
Mortgage rates ran up in the following weeks—but fell following the failure of Silicon Valley Bank. “Home sales will continue to bounce around, depending on the movements of the mortgage rates,” Yun said.
While mortgage rates have pulled back, they have not fallen to the historic lows seen earlier in the pandemic. Higher rates could be keeping homeowners from selling, the chief economist said. “Many people are loving their 3% mortgage rates and they don’t want to give that up,” Yun said.
Inventory is still “super tight,” said Yun. At February’s pace, it would take 2.6 months to sell through the for-sale existing homes on the market—faster than January’s 2.9 months, but higher than the 1.7 months in February 2022. The low supply of existing-homes for sale may steer some buyers towards new homes, Yun added.
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