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NAR: Existing-Home Sales Increased to 4.58 million SAAR in February; Median Prices Declined YoY
Median Prices Down 12.3% from Peak in June 2022
Existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020, according to the National Association of REALTORS®. Month-over-month sales rose in all four major U.S. regions. All regions posted year-over-year declines.
Total existing-home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops – vaulted 14.5% from January to a seasonally adjusted annual rate of 4.58 million in February. Year-over-year, sales fell 22.6% (down from 5.92 million in February 2022).
Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.
The sales rate was well above the consensus forecast, but close to housing economist Tom Lawler’s projection.
Sales in February (4.58 million SAAR) were up 14.5% from the previous month and were 22.6% below the February 2022 sales rate.
Sales Year-over-Year and Not Seasonally Adjusted (NSA)
The second graph shows existing home sales by month for 2022 and 2023.
Sales declined 22.6% year-over-year compared to February 2022. As the NAR noted, this broke a 12-month streak of month-to-month sales declines. However, this was the eighteenth consecutive month with sales down year-over-year.
The third graph shows existing home sales for each month, Not Seasonally Adjusted (NSA), for a few selected periods. Black and light Purple are the maximum sales per month during the bubble (2005) and the minimum sales during the bust (2008 - 2011). The most recent five years are shown (2019 through 2023).
Sales NSA in February (271,000) were 23.0% below sales in February 2022 (352,000). On an NSA basis, sales were the lowest for February since 2011, and sales were only 13.9% above the record low for February in 2009.
This decrease in sales, NSA, was similar to change in the markets I track each month.
Housing Inventory was Unchanged in February
The fourth graph shows nationwide inventory for existing homes.
According to the NAR, inventory was unchanged at 0.98 million in February from 0.98 million in January.
Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The fifth graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.
Inventory was up 15.3% year-over-year (blue) in February compared to February 2022. This includes some pending sales - and doesn’t match some other measures - and it seems likely that active inventory was up year-over-year much more in February than the NAR is reporting.
Months of supply (red) declined to 2.6 months in February from 2.9 months in January.
Median House Prices Declined Year-over-Year
On prices, the NAR reported:
The median existing-home price for all housing types in January was $363,000, a decline of 0.2% from February 2022 ($363,700), as prices climbed in the Midwest and South yet waned in the Northeast and West. This ends a streak of 131 consecutive months of year-over-year increases, the longest on record.
Median prices are distorted by the mix (repeat sales indexes like Case-Shiller and FHFA are probably better for measuring prices).
The YoY change in the median price peaked at 25.2% in May 2021 and prices are now down 0.2% YoY. Median house prices increased 0.5% from January to February and have declined 12.3% from the peak in June 2022 (NSA).
It is likely the Case-Shiller index will be down soon year-over-year.
Note that closed sales in February were mostly for contracts signed in December and January. Mortgage rates, according to the Freddie Mac PMMS, decreased to around 6.4% in December and 6.3% in January, and that provided a boost to closed sales in February. March sales will be for contracts signed in January and February, and mortgage rates averaged 6.3% in February too (spiking at the end of the month), so the impact from the recent increase in rates won’t happen until the April or May report.
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