Existing-home sales dropped 6.6 percent from January to February, as inventory remains at historic lows, prices continue to soar across the country and mortgage rates continue to march upward on a weekly basis.
Even with the drop, existing-home sales remained 9.1 percent higher than February 2020, according to the data released Monday by the National Association of Realtors (NAR), which shows the housing market is outperforming last year’s sales rate before the pandemic shut the country down.
“Despite the drop in home sales for February — which I would attribute to historically-low inventory — the market is still outperforming pre-pandemic levels,” Lawrence Yun, NAR’s chief economist, said in a statement.
Total inventory at the end of the month amounted to 1.03 million units, the same as the end of January, but 29.5 percent below last year’s level. There are two months of unsold inventory supply at the current sales pace.
With inventory at historic lows, the competition for homes continues to push prices upward. The median existing-home price for all housing types in February climbed 15.8 percent year over year, to $313,000.
Rising home prices and mortgage rates over 3 percent could eventually cut into affordability and further slow the booming housing market, according to Yun, but he still expects it will outperform last year’s levels.
“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” Yun said. “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”