Existing-Home Sales Down in February as Days on Market Widen

Key takeaways:

• February existing-home sales increased 4.2% month-over-month and fell 1.2% annually
• The nationwide median existing-home sales price hit $398,400 in February — a 3.8% gain from the previous year
• The inventory of unsold existing homes increased 5.1% month-over-month and grew 17% year-over-year to a 3.5-month supply at the current pace of sales

Existing home sales grow

Existing-home sales decreased 1.2% in February compared to the year before and increased 4.2% month-over-month, according to the National Association of Realtors (NAR).

The median existing-home sales price reached $396,900. That grew 3.8% from $383,800 in February 2024 — the 20th straight month of annual gains — and 0.4% from $396,900 in January.

"Each one percentage point gain in home price translates into an approximately $350 billion increase in housing equity for American property owners," said Lawrence Yun, chief economist at NAR. "The ongoing housing shortage, coupled with historically low mortgage default rates, implies a solid foundation for home values."

Regionally, the South had the most existing-home sales in February, with an annual rate of 1.91 million units. That fell 4% from the year prior, while the median price grew 1.9% to $358,800.

The Midwest's 1 million units came next, up 1% year-over-year. Its median price grew 5.8% to $295,500.

The West accounted for 850,000 existing sales, flat from one year ago. Typically the costliest part of the country, the median price increased annually by 3.6% to $614,600.

The Northeast's 500,000 sales grew 4.2% annually. The median price jumped 10.4% from a year earlier to $464,300.

"Home buyers are slowly entering the market," said Yun. "Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand."

Factors influencing the market

NAR Chief Economist Lawrence Yun has pointed to two significant factors impacting existing-home sales: low for-sale inventory and high mortgage rates. 

Given the ongoing tight supply, properties on the market still receive multiple offers, especially starter- and mid-priced homes, he said.

"The housing market continues to unthaw slowly amid considerable affordability challenges brought on by high interest rates and rising homeownership expenses," said Selma Hepp, chief economist at CoreLogic. "Lower mortgage rates later this year will provide a breather, though the average potential home buyer continues to maintain a wait-and-see approach. Improvements in existing for-sale inventory are critical and will help thaw out sales further."

Housing inventory reached 1.24 million units at the end of February, up 17% yearly and 5.1% monthly. Unsold homes sit at a 3.5-month supply at the current sales pace, up from 3 months in February 2024 and even with January. Traditionally, six months worth of inventory defines a balanced housing market.

Moreover, time on market expanded to 42 days in February from 38 days the year before and 41 days in January. All-cash buyers accounted for 32% of existing-sales, inching down from 33% the year prior and up from 29% the previous month.

Navigating the housing market

Embarking on the journey to homeownership is an exciting and significant step in one's life. To help you navigate this path successfully, we've compiled three practical tips:

1. Stay on top of housing inventory: Keep an eye on changes in inventory levels, as this can impact your choices and negotiation power. Be ready to act when the right opportunity arises.
2. Assess your budget and financing options: With low housing affordability being a factor in declining sales, it's crucial to evaluate your financial circumstances. Explore different financing options and ensure that you find a home that aligns with your budget and long-term financial goals.
3. Be proactive and act quickly: When you find a home that meets your criteria, be proactive and act quickly to avoid missing out. The best way to do so is by securing a mortgage prequalification in advance.

The bottom line

As a home buyer, navigating the current real estate market can feel overwhelming at times. But armed with the right knowledge, you can approach the process with confidence.

Stay informed about the latest trends, assess your budget, explore down payment assistance programs in your area, and act quickly when you find the right home.