Sales of previously owned U.S. homes fell in February by more than forecast to a six-month low as a limited supply of properties and high prices deterred potential buyers.
Contract closings decreased 7.2% in February from the prior month to an annualized 6.02 million, figures from the National Association of Realtors showed Friday. The median forecast in a Bloomberg survey of economists called for a 6.1 million annualized rate in February. The monthly drop was the biggest in a year.
“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” Lawrence Yun, NAR’s chief economist, said in a statement Friday.
The slide in sales reflects a market still constrained by a lack of inventory, which in February was the second-lowest on record. Buyers are bidding up prices on the few homes available. Meantime, affordability is showing signs of worsening, especially among first-time buyers.
Builders are facing high materials costs, especially in the wake of Russia’s invasion of Ukraine, and mortgage rates already at an almost three-year high will keep climbing as the Federal Reserve tightens policy. Meantime, broad-based inflation is driving up the costs of necessities like gasoline, food and rent.
The NAR data showed that the number of homes for sale rose from a month earlier -- typical this time of year -- but were still 15.5% lower than a year ago. At the current pace it would take 1.7 months to sell all the homes on the market, close to a record low. Realtors see anything below five months of supply as a sign of a tight market.
The median selling price rose 15% from a year earlier, to $357,300 in February.
First-time buyers accounted for 29% of sales last month, down from 31% a year earlier. Yun said at current rates, monthly mortgage payments are up 28% from February last year.
Digging Deeper
- All four regions posted sales declines, led by sizable drops in the Northeast and Midwest
- Properties remained on the market for an average of 18 days last month, compared to 20 days a year earlier
- Existing condominium and co-op sales fell 9.5%; sales of single-family homes declined 7%
- Cash sales represented 25% of all transactions in February and investors made up 19% of the market
- Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and February data will be released next week.
