Existing-home sales rose 3 percent in February, to a seasonally adjusted annual rate of 5.54 million units, from 5.38 million in January, according to the real estate trade association.
“A big jump in existing sales in the South and West last month helped the housing market recover from a two-month sales slump,” said Lawrence Yun, chief economist with NAR, during a web seminar Wednesday. “The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018. However, even as seasonal inventory gains helped boost sales last month, home prices, especially in the West, shot up considerably.”
“Affordability,” Yun added, “continues to be a pressing issue because new and existing housing supply is still severely subpar.”
The median existing-home price grew 5.9 percent year-over-year, to $241,700. The increase marks the 72nd consecutive month of year-over-year gains, according to Yun.
Housing inventory rose 4.6 percent, to 1.59 million existing homes on the market, but the stock of available homes for sale remains 8.1 percent lower than the previous February. Year-over-year inventory has fallen for 33 consecutive months, according to the NAR data.
The housing shortage has festered as the result of rising construction costs, a decline in skilled labor, and dwindling land availability chisel away at incentives for developers to build affordable starter homes as opposed to higher-end homes in metropolitan areas including California, Illinois and Connecticut, among other pricier regions.
Yun said on Wednesday that the sale of homes priced between $100,000 and $250,000 declined by 1 percent in February while homes priced above $250,000 continued to spike, including on the West Coast, where he said tax reform has yet to be a deterrent to sales.
“We thought the upper-end market would be vulnerable, but we’re not seeing that,” said Yun.
The sale of single-family homes increased 4.2 percent in February, while prices for those homes increased 5.9 percent, according to the NAR figures on Wednesday.
“We continue to need more home builders to come into the market, to build more homes,” said Yun, who added that in February homes stayed on the market for about 37 days.