Existing-home sales saw a big February jump, rising 6.5% from January to a seasonally-adjusted rate of 5.77 million units.
That’s according to the National Association of Realtors (NAR), which also reported that February marked the eighth consecutive month that existing-home sales increased year over year, rising 7.2% from 5.38 million in February 2019. Lawrence Yun, chief economist for the NAR, noted that February’s sales pace was the strongest since February 2007.
Geographically, most of the country saw existing home sales grow, with just the Northeast region reporting a monthly drop in sales (down 4.1% from January to February). The other three regions posted month-over-month increases, including a sizable 18.9% gain in the West. The South and Midwest saw monthly gains of 7.2% and 0.8%, respectively.
The median price for existing-homes in February was $270,100, up 8.0% from February 2019. Prices increased in every region, and February’s price gain marks 96 straight months of year-over-year growth.
Joel Kan, associate vice president of economic and industry forecasting at the Mortgage Bankers Association, said that February’s sales activity was in line with stout purchase application data from the MBA’s weekly surveys and called the robust month “another indicator of housing market health before the current coronavirus turmoil.” Yun attributed the strength to “incredibly low mortgage rates and the steady release of a sizable pent-up housing demand that was built over recent years.”
Housing inventory at the end of February was at 1.47 million units, up 5.0% from January but down 9.8% from February 2019. Unsold inventory is now at a 3.1-month supply at the current sales pace, unchanged from January but down from 3.6 months at the end of February 2019.
Properties stayed on the market for 36 days in February, seasonally down from 43 days in January and from 44 days in February last year. Forty-seven percent of homes sold were on the market for less than a month.
Thirty-two percent of sales came from first-time homebuyers, unchanged both month to month and year to year.
Now, with February likely the last month before coronavirus has a major impact, industry observers eagerly await new data to see how the outbreak affects the market.
“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,” said Kan.
“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,” concurred Yun.
Whatever the case, Yun is confident that buyers will reemerge after the COVID threat has passed.
“For the past couple of months, we have seen the number of buyers grow as more people enter the market,” he 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.”
Home prices, he added, should keep well until the coronavirus risk abates.
“Unlike the stock market, home prices are not expected to drop because of the ongoing housing shortage and due to homes getting delisted during this time of crisis,” he said.
