U.S. existing home sales rebound; year-over-year house prices fall

WASHINGTON (Reuters) – U.S. existing home sales increased for the first time in a year in February as a decline in prices on an annual basis pulled buyers back into the market, further evidence that the housing market was stabilizing at low levels.

Existing home sales surged 14.5% to a seasonally adjusted annual rate of 4.58 million units last month, the National Association of Realtors said on Tuesday. The biggest increase since July 2020 ended 12 straight monthly declines in sales, which was the longest such stretch since 1999.

Sales increased in all four regions, with outsized gains in the Midwest, West and the densely populated South. Economists polled by Reuters had forecast home sales would rebound 5.0% to a rate of 4.20 million units.

Home resales, which account for a big chunk of U.S. housing sales, fell 22.6% on a year-on-year basis in February.

The housing market has been battered by Federal Reserve interest rate hikes, the most aggressive in the U.S. since the 1980s, aimed at taming high inflation. But the worst of the housing market downturn could be over.

A survey last week showed the National Association of Home Builders/Wells Fargo Housing Market Index increased for a third straight month in March, though homebuilder sentiment remains depressed. Single-family housing starts and building permits rebounded in February.

Mortgage rates, which had resumed their upward trend, are falling again in tandem with a sharp decline in U.S. Treasury yields following the recent collapse of two U.S. regional banks sparked fears of contagion in the banking sector.

Despite financial market instability, the Fed is expected to raise interest rates by another quarter of a percentage point on Wednesday, according to CME Group’s (NASDAQ:) FedWatch tool.

The median existing house price fell 0.2% from a year earlier to $363,000 in February. That was the first price decline since February 2012.

“We’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs,” NAR Chief Economist Lawrence Yun said.

There were 980,000 previously owned homes on the market, unchanged from January and an increase of 15.3% from a year ago. At February’s sales pace, it would take 2.6 months to exhaust the current inventory of existing homes, up from 1.7 months a year ago. A four-to-seven-month supply is viewed as a healthy balance between supply and demand.

Properties typically remained on the market for 34 days last month, up from 33 days in January. Fifty-seven percent of homes sold in February were on the market for less than a month.

First-time buyers accounted for 27% of sales, down from 29% a year ago. All-cash sales made up 28% of transactions compared to 25% a year ago.

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