Existing Home Sales Drops 7.1% In February, But 2.2% Higher Than 2015
Sales of previously-owned homes dropped 7.1 percent in February as a continuous lack of supply and soaring prices resulted in buyers sitting out of the market. Existing home sales for the said month, which included completed transactions of single-family homes, townhomes, condominiums and co-ops, tumbled to a seasonally-adjusted yearly rate of 5.08 million. The figure is actually a drop from the 5.47 million in January. Despite the decrease, February sales were still 2.2 percent higher than 2015.
The National Association of Realtors reported on March 21, Monday that the February decline came after a solid start to the year in January, when sales reached their fastest speed in six months. Last month's drop was felt specifically in regions of the country that underwent harsh winter weather. Sales in the Northeast sales dropped 17.1 percent, the Midwest 13.8 percent, though sales had plunged across the country. February's numbers disheartened economists surveyed by Bloomberg prior to the release, according to Forbes.
NAR chief economist Lawrence Yun stated that the sluggish contract signings in January due to the large East Coast blizzard, along with the drop in the stock market, may have resulted in February's closing drought. However, he said the main problem was still the supply and affordability issue. Finding the perfect property at a cheaper price is burdening most potential buyers.
Prices increased by 4.4 percent year-over-year in February, bringing the average existing home cost to $210,800. That annual increase significantly dropped from January, when prices reached 8.2 percent year-over-year. February marked 48 straight months of year-over-year price increase, according to Wall Street Journal.
Yun noted that the housing supply continued to fall short of the supply level economists deem as a healthy market. The supply of available housing for sale rose to 1.88 million existing homes at the end of February. This was a 4.4-month supply at the existing sales pace which was an increase from a 4-month supply in January, but still under the 1.90 million inventory level from a year ago.