WASHINGTON: Sales of existing homes in the United States made their biggest monthly jump since 2020 in February, ending a year of declines according to industry data released on Tuesday. As the US central bank raised interest rates steeply over the past year to curb surging inflation, the rate-sensitive housing market has been reeling.
But last month, existing home sales rose 14.5 percent from January to a seasonally adjusted annual rate of 4.58 million, said the National Association of Realtors (NAR) in a statement. Compared with a year ago however, sales were still down by 22.6 percent, the NAR said.
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” added NAR chief economist Lawrence Yun in a statement. He added that sales are stronger in areas where home prices are falling and local economies are adding jobs. According to home loan finance company Freddie Mac, the popular 30-year fixed-rate mortgage averaged 6.6 percent as of March 16, down from the week before. Existing home sales make up the vast majority of the US property market.
Costs are a constraint
“Mortgage rates remain high although they have come off recent peaks,” said High Frequency Economics chief US economist Rubeela Farooqi in a note. “But affordability remains a key constraint for buyers,” she said. Kieran Clancy, senior US economist at Pantheon Macroeconomics, added: “A dramatic improvement in affordability is still needed before sales can recover.”
The median home price across housing types was down slightly from a year ago at $363,000, said the NAR. But Yun added that “inventory levels are still at historic lows.” Month-over-month sales picked up in all four major US regions. As of end-February, total housing inventory was 980,000 units, identical to January and up from a year ago, said the association.
“Unsold inventory sits at a 2.6-month supply at the current sales pace,” the NAR noted. Nancy Vanden Houten, lead US economist at Oxford Economics, cautioned: “We expect home sales to come under renewed pressure in the months ahead, with a recession in the second half of the year also weighing on home sales.” – AFP