Sales of existing homes made the biggest jump in a year last month on improved housing supply, according to industry data released Thursday, as mortgage rates held at slightly lower levels.
Existing home sales advanced 9.5 percent in February from January to an annual rate of 4.38 million, seasonally adjusted, the National Association of Realtors (NAR) said.
“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun.
This was the highest rate since February 2023, with sales of previously owned homes bogged down by elevated mortgage rates in recent times.
Mortgage rates have climbed rapidly in the past two years as the Federal Reserve hiked the benchmark lending rate to ease demand and tamp down surging inflation — but levels have cooled somewhat from November 2023.
According to home loan finance company Freddie Mac, the 30-year fixed-rate mortgage averaged 6.7 percent as of March 14, down from the prior week.
Yun added that, mortgage rate changes are more incremental than before, and the NAR will be monitoring upticks.
– Landmark deal –
Yun also noted the potential impact of a settlement announced last Friday that could slash the cost of buying and selling homes.
In a landmark deal, the NAR agreed to end lawsuits by paying $418 million in damages and eliminating rules on commissions — meaning a six percent sales commission which has become a standard in the industry would be no more.
While it is early days yet, Yun said sellers could be potential winners in this situation, knowing that they need not offer compensation to the buyers’ agent.
But there are concerns that some first-generation buyers who may have tighter cashflows “could be really squeezed,” he told reporters.
Compared with February last year, however, home sales last month were still 3.3 percent down, NAR data showed.
“Overall, low supply and high mortgage rates remain significant obstacles for buyers,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
But a rise in building activity and drop in borrowing costs as the central bank starts cutting interest rates could help sales, she added.
The NAR noted that total housing inventory has risen from January.
The median price of existing homes was $384,500, which was 5.7 percent up from the previous year.
Despite the latest surge, analysts at Pantheon Macroeconomics recently cautioned that “a sustained recovery in sales requires a sustained recovery in mortgage applications, and that hasn’t happened yet.”
© 2024 AFP
