Existing Home Sales Plunge 7.1% in February

Lawrence Yun, NAR chief economist, says existing sales disappointed in February and failed to keep pace with what had been a strong start to the year. “Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” he said. “The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings. However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”

Worries about a slowing economy may also be holding back buyers said Yun. In a recent NAR survey, fewer respondents believe the economy is improving and fewer renters think it is a good time to buy a home.

“The overall demand for buying is still solid entering the busy spring season, but home prices and rents outpacing wages and anxiety about the health of the economy are holding back a segment of would-be buyers,” says Yun.

Single-family housing slid 7.2 percent from January to a seasonally adjusted annual rate of 4.51 million. Median price rose 4.3 percent y/y to $212,300.

Existing condominium and co-op sales decreased 6.6 percent to a seasonally adjusted annual rate of 570,000 units. The median existing condo price was $198,900 in February, which is 5.1 percent above a year ago.

All four U.S. regions reported lower sales in February with transactions falling by double digit percent in the Northeast and Midwest.

Sales in the Northeast saw the biggest plunge, down 17.1 percent to an annual rate of 630,000. Midwest sales fell 13.8 percent to an annual rate of 1.12 million. Median home price declined 0.8 percent y/y in the Northeast but grew 6.3 percent in the Midwest.

Existing-home sales in the South decreased 1.8 percent and 3.4 percent in the West. Median home price was up 5 percent y/y in the South while median price in the West was 7.0 percent higher.

The National Realtor’s Association noted that investor purchase of lower priced homes for conversion to rental units has created an additional roadblock for first-time buyers. With less distressed inventory on the market, investor sales have trended higher in recent months after falling to a low of 12 percent of sales in August 2015.