The median U.S. home price was lower this February than it was in February 2022, ending more than a decade of year-over-year increases, according to a National Association of Realtors report released Tuesday.
The median existing home price was $363,000 in February, down 0.2% from a year ago. This marked the first year-over-year price decline in 131 months in a row of year-over-year increases that began in February 2012.
But home sales rose, producing the largest monthly percentage increase since July 2020.
U.S. home sales rose in February as median home prices were lower than a year ago, following a full year in which home sales fell due to rising mortgage rates and prices, driving homebuyers out of the market. February’s slump in sales ended the longest streak of monthly declines in home sales, dating back to 1999 for all homes and 1968 for single-family homes.
Sales of existing homes — which include single-family homes, townhomes, condominiums and co-ops — rose 14.5% from January to February. But sales are down 22.6% from last year.
The seasonally adjusted annual sales pace fell to 4.58 million units from 5.92 million units a year ago. The steep decline in sales activity has been driven by a large increase in mortgage rates over the past year.
Mortgage rates remain volatile — in February, rates rose half a percentage point — but prices are cooling, according to NAR.
“Recognizing mortgage rates changing, homebuyers take advantage of any rate declines,” said Lawrence Yun, NAR’s chief economist. “We’re seeing strong sales gains in areas where home prices are falling and local economies are adding jobs.”
Inventory is stubbornly low, Yun said.
Total housing inventory at the end of February was 980,000 units, the same as last month and up 15.3% from a year ago. Unsold inventory is at a current sales pace of 2.6 months’ supply, down 10.3% from January, but 1.7 months from a year ago.
“Inventory levels are still at historic lows,” Yun added. “As a result, many offers are returning on a good number of properties.”
Existing home sales rose in February as buyers responded slightly lower to lower mortgage rates as prices fell from November, said Hannah Jones, economic data analyst at Realtor.com.
Unrelenting housing demand continues to be sensitive to mortgage rate changes as potential buyers take advantage of any improvement in affordability,” he said.
With low inventory and strong demand to buy keeping prices strong in many places, home sellers considering putting their home on the market will be in an even stronger position to cash in on home equity, he said. “But the shrinking buyer pool makes the task more challenging,” Jones said.
“Home sales are well below last year’s levels, indicating significant affordability gains must be made before buyers can return to the market en masse,” Jones said.
February typically marks the start of the spring buying season and usually when the weather warms up and the school year ends both buyer and seller get in on the action.
“As high prices and elevated mortgage rates continue to inhibit buyer activity, this spring’s market is expected to be subdued compared to the past two years,” he said. “However, the housing market is tight, so well-priced, well-maintained listings will attract a buyer’s attention.”
This story is developing and will be updated.