Is it a warning sign of bleaker days ahead for U.S. housing hobbled by tight supplies, or just the occasional blip in an otherwise healthy market?
Whichever the case, the just-released figures for February’s existing-home sales were disappointing.
Completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 7.1 percent to a seasonally adjusted annual rate of 5.08 million in February, down from 5.47 million in January. Despite last month’s large decline, sales are still 2.2 percent higher than a year ago.
Factors cited by the National Association of Realtors: “Unshakably low supply levels and steadfast price growth in several sections of the country.”
“Sales took a considerable step back in most of the country last month, and especially in the Northeast and Midwest,” said Lawrence Yun, NAR chief economist. “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.”
The median existing-home price for all housing types in February was $210,800, up 4.4 percent from February 2015 ($201,900). February’s price increase marks the 48th consecutive month of year-over-year gains.
Total housing inventory at the end of February increased 3.3 percent to 1.88 million existing homes available for sale, but is still 1.1 percent lower than a year ago (1.90 million). Unsold inventory is at a 4.4-month supply at the current sales pace, up from 4.0 months in January.
“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.
Yun added that Investor sales have trended “surprisingly higher in recent months” after falling to as low as 12 percent of sales in August 2015.
All-cash sales were 25 percent of transactions in February, down from 26 percent both in January and a year ago. Individual investors, who account for many cash sales, purchased 18 percent of homes in February (17 percent in January), matching the highest share since April 2014. Sixty-four percent of investors paid cash in February.