Sales of previously occupied U.S. homes surged in February to the fastest pace in six months as homebuyers seized on a modest drop in mortgage rates and slight pullback in prices.
Existing home sales jumped 14.5% last month from January to a seasonally adjusted annual rate of 4.58 million, the National Association of Realtors said Tuesday. That’s the strongest sales pace since September and it's higher than the 4.2 million economists were expecting, according to FactSet.
The surge in sales ended a 12-month decline that led to the the nation’s worst housing slump in nearly a decade as mortgage rates surged following a series of interest rate increases by the Federal Reserve last year. Still, sales are down 22.6% compared with February last year.
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” said Lawrence Yun, the NAR's chief economist. “Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
The national median home price slipped 0.2% from February last year to $363,000, the NAR said.
The inventory of homes on the market was unchanged from January but rose 15.3% from February last year. Some 980,000 homes were on the market by the end of the month. That amounts to a 2.6-month supply at the current sales pace. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.
The average long-term rate on a 30-year mortgage reached a two-decade high of 7.08% in the fall. Rates eased in December and January, and began creeping up in February.
The average rate slipped to 6.60% last week, according to mortgage buyer Freddie Mac. A year ago, the rate averaged 4.16%. Higher rates can add hundreds of a dollars a month in costs for homebuyers, on top of already high home prices.
