Real Estate Sales Decrease this February to the Lowest in 11 Years

Real Estate Sales – In February, US existing home prices fell from a year earlier for the first time in 11 years, as lower mortgage rates pushed home sales up from January levels.

On Tuesday, the National Association of Realtors reported that the national median price of existing homes fell 0.2% in February compared to the same month a year earlier, reaching $363,000. This is the first year-over-year drop since February 2012. Median prices are down 12.3% from their all-time high of $413,800 in June. It should be noted that the price figures have not been adjusted for seasonality.

According to NAR, existing home sales, which account for the largest share of the real estate market, increased 14.5% in February compared to the previous month, reaching a seasonally adjusted annual rate of 4.58 million. This increase ended a 12-month streak of declines in sales. However, sales in February registered a decrease of 22.6% compared to the same month of the previous year.

For a year, existing home sales had been in decline. However, in 2022, rising mortgage rates due to the Federal Reserve’s actions to control inflation made home buying unaffordable for many buyers, prompting them to exit the market. As a result, the demand dropped significantly in some markets, especially in the western states.

In early 2023, mortgage rates experienced a decline after reaching a 20-year high above 7% in October and November of the previous year. This reduction stimulated an increase in home-buying activity.

“In my opinion, home sales have reached an all-time low,” said Lawrence Yun, NAR’s chief economist. “In January and February, mortgage rates came down slightly and people … wanted to take advantage of this opportunity.”

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This week, Fed officials are debating whether to hold interest rates steady or continue to raise them. However, the recent decline of Silicon Valley Bank and Signature Bank, as well as the acquisition of Credit Suisse Group AG by UBS Group AG, has created uncertainty in the Fed’s decision. The two-day meeting of Fed officials Fed will conclude on Wednesday.

The current downturn in the housing market is one of the main ways the Federal Reserve is fighting inflation by raising interest rates. Housing is one of the most rate-sensitive economic sectors, and high housing costs have contributed significantly to inflation.

According to a survey by The Wall Street Journal, economists had forecast a 5% increase in existing home sales in February from the previous month.