Washington, D.C. CNN —
The median price for a US home this February was lower than it was in February 2022, ending more than a decade of year-over-year increases, the longest on record, according to a National Association of Realtors report released Tuesday.
The median price of existing homes in February was $363,000, down 0.2% year-on-year. This is the first year-over-year price decline in 131 consecutive months of year-over-year increases that began in February 2012.
However, home sales surged higher, posting the largest monthly percentage increase since July 2020.
With average home prices lower than a year ago, US home sales surged in February after a full year of declining home sales on the back of rising mortgage rates and persistently high prices, keeping homebuyers out of the market. The February sales slump also ended the longest streak of monthly declines in home sales on record, dating back to 1999 for all homes and 1968 for single-family homes.
Existing home sales – which include single family homes, townhouses, condos and coops – are up 14.5% in February from January. But sales fell 22.6% year over year.
The seasonally adjusted annualized pace of sales fell to 4.58 million from 5.92 million units last year. The sharp drop in sales activity is due to the sharp rise in mortgage interest rates over the past year.
Mortgage rates remain volatile — rates rose half a percentage point in February — but prices are cooling, according to the NAR.
“Homebuyers are aware of changing mortgage rates and are benefiting from rate declines,” said Lawrence Yun, NAR’s chief economist. “We’re seeing stronger sales growth in areas where property prices are falling and the local economy is creating jobs.”
Inventory levels remain stubbornly low, Yun said.
The total housing stock stood at 980,000 units at the end of February, the same as last month and up 15.3% from a year ago. Unsold inventory at the current pace of selling is 2.6 months supply, down 10.3% from January but up from 1.7 months a year ago.
“Inventory levels are still at historic lows,” Yun added. “As a result, multiple offers are coming back for a good number of properties.”
Existing home sales gained ground in February as buyers reacted to mortgage rates, which were slightly lower since rates had been falling since November, said Hannah Jones, economic data analyst at Realtor.com.
“Pedged demand for housing remains sensitive to changes in mortgage rates as potential buyers take advantage of any affordability improvements,” she said.
Home sellers considering putting their home on the market will still be in a strong position to capitalize on home equity, she said, as low inventories and strong buying demand have kept prices strong in many places. “But the dwindling buyer pool makes the task more difficult,” Jones said.
“Home sales remain well below last year’s levels, suggesting significant affordability gains must be made before buyers can return to the market en masse,” Jones said.
February usually marks the start of the spring buying season and typically both buyer and seller activity picks up as the weather warms up and the end of the school year approaches.
“As high prices and elevated mortgage rates continue to stifle buyer activity, the market is expected to soften this spring compared to recent years,” she said. “However, the housing market remains underserved, so well-priced, well-maintained offerings are likely to capture buyers’ attention.”
This story is evolving and updated.