Single family homes are seen in this aerial photograph taken from a Lennar Corp. development. in San Diego, California.
Bing Guan | Bloomberg | Getty Images
Closed sales of existing homes in February fell 6.6% higher than expected, compared to January, according to the National Association of Realtors.
This put them at a seasonally adjusted annualized rate of 6.22 million units, which was 9.1% higher compared to February 2020.
Despite being at the height of the historically bustling spring property market, homeowners are not listing their properties for sale at the rate they normally would at this time of year. The supply of homes for sale fell 29.5% year-on-year, the biggest annual drop on record, to 1.03 million homes.
At the current pace of sales, it would take two months to exhaust this offer. A year ago, it was a three-month offer, also considered low.
This restricted supply continues to drive home prices, which were 15.8% higher in February of the year after year. The average price of an existing home sold during the month was $ 313,000. This is the highest February price ever recorded. Prices are rising due to the bidding wars for houses, but the median has also been tilted upwards because more sales are taking place at the upper end of the market.
Sales of homes priced over $ 1 million were 81% higher compared to the previous year. Homes priced between $ 100,000 and $ 250,000 fell 11%.
“The fact that, even with the drop in sales, the days on the market are fast and prices are going up,” said Lawrence Yun, chief economist at the Securities Broker. “This means that it is not due to the disappearance of market demand, it is really a lack of supply.”
Homes are also selling at the fastest pace on record. The average number of days on the market has dropped to just 20.
Buyers in February also faced higher mortgage rates than at the end of last year, which reduced their purchasing power. The average rate on 30-year fixed mortgages fluctuated around 2.8% in January, according to Mortgage News Daily. Then, it started to grow steadily in February, reaching 3.27% at the end of the month. Those who closed their houses in February, however, probably would have blocked their fees in January.
“As early as this year, the monthly cost of a $ 300,000 loan has increased by $ 70,” said Danielle Hale, chief economist at realtor.com. “Looking ahead, the large and still growing cohort of consumers reaching the best age to buy a home will keep interest rates high, but whether buyers can translate that desire into ownership will depend on whether buyers’ income increases along with growth. economic, buyers are willing to allow housing costs to occupy a larger part of their monthly budgets, or if more houses for sale help to stem the pace of rising house prices. “
Construction companies continue to face headwinds for faster production, such as higher costs for land, labor and materials, as well as delays in the supply chain. The start of single-family homes was lower in February than expected, but part of this may be related to the harsh winter weather in the south.
Regionally, sales of existing homes fell 11.5% month-on-month in the Northeast. They fell 14.4% in the Midwest and were 6.1% lower in the South. The West was the only region to record a 4.6% monthly gain.