(Washington, DC – Insurance News 360) – Low inventory and fast price growth did not hamper existing home sales in February, according to the National Association of Realtors (NAR). Instead, existing home sales increased three percent to 5.54 million (a seasonally adjusted annual rate), up from 5.38 million in January. This brings sales up 1.1 percent over March 2017.
“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 NAR Chief Economist Lawrence Yun. “The very healthy U.S. economy and labor market are creating a sizeable 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 continues to be a pressing issue because new and existing housing supply is still severely subpar.”
In all housing types, the median price for existing homes was $241,700, which is up almost six percent from February 2017. Housing inventory was up 4.6 percent, but at 1.59 million, is still lower than where it was a year ago, and has seen a year-over-year decrease for nearly three years.
“Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth,” said Yun. “Homes for sale are going under contract a week faster than a year ago, which is quite remarkable given weakening affordability conditions and extremely tight supply. To fully satisfy demand, most markets right now need a substantial increase in new listings.”
The hottest metropolitan areas for home sales in February include San Francisco-Oakland-Hayward, Calif.; Midland, Texas; Vallejo-Fairfield, Calif.; San Jose-Sunnyvale-Santa Clara, Calif.; and Sacramento-Roseville-Arden-Arcade, Calif. More than a quarter of home buyers were first-time buyers in February.
NAR President Elizabeth Mendenhall, a sixth-generation Realtor® from Columbia, Missouri and CEO of RE/MAX Boone Realty, says first-time buyers are seeing stiff competition for the available listings in their price range. “Realtors® in several markets note that entry-level homes for first-timers are hard to come by, which is contributing to their underperforming share of overall sales to start the year.” she said. “Prospective buyers should start conversations with a Realtor® now on what they want in a new home. Even with the expected uptick in new listings in coming months, buyers in most markets will likely have to act fast on any available listing that checks all their boxes.”
Source: National Association of Realtors.