February Home Sales Defy Expectations with 4.2% Jump

the staff of the Ridgewood blog

Ridgewood Nj, In a surprising turn, sales of previously owned homes rose 4.2% in February, reaching an annualized pace of 4.26 million units, according to the National Association of Realtors (NAR). Industry experts had anticipated a 3% decline, making this increase an unexpected boost for the housing market.

Despite the monthly rise, sales were still down 1.2% compared to February 2023. The numbers are based on closings, reflecting contracts signed in December and January—a period when mortgage rates hovered around 7% for a 30-year fixed loan. Rates have since eased slightly into the high 6% range, making homeownership a bit more accessible.

What’s Driving the Market?

According to NAR Chief Economist Lawrence Yun, buyers are gradually returning to the market:

“Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”

✅ Luxury Homes Are Selling: Sales growth was primarily seen in homes priced above $750,000, while sales near the median price point fell 3% year over year.

✅ Inventory on the Rise: The number of homes for sale climbed 17% year over year to 1.24 million units, yet supply remains tight at 3.5 months (a balanced market typically needs six months).

✅ Prices Continue to Climb: The median home price hit $398,400, a 3.8% increase from last year and a record high for February. Home prices rose across all U.S. regions.

Who’s Buying Homes Right Now?

🏡 First-Time Buyers: Made up 31% of sales, up from 26% last year, showing renewed interest from new homeowners.

💰 Investors Pulling Back: Investor purchases fell to 16% of sales, down from 21% last year.

💵 Cash Buyers Hold Steady: All-cash purchases made up 32% of sales, slightly lower than last year. The dip in investor activity suggests that more owner-occupants are using cash to secure homes.

What’s Next for the Housing Market?

While February’s sales numbers were stronger than expected, a separate John Burns Research & Consulting survey indicates real estate agents are seeing a weaker-than-usual spring market.

📉 53% of agents reported that spring home sales are slower than normal, compared to 47% in January. Affordability concerns and economic uncertainty are keeping some buyers on the sidelines.

Bottom Line:
The housing market remains competitive yet constrained, with rising prices, slightly lower mortgage rates, and an increase in first-time buyers. However, economic uncertainty and affordability challenges could slow future sales.

🏡 Thinking of buying or selling? Now’s the time to stay informed and strategize for success in this evolving market!

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