January started off 2017 with the highest number of existing home sales in a decade, but February decreased slightly, coming down off that high, according to the latest report from the National Association of Realtors.
Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, fell 3.7% to a seasonally adjusted rate of 5.48 million in February. Despite this decline, existing sales are still up 5.4% from last year.
“Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” NAR Chief Economist Lawrence Yun said.
“Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market,” Yun said. “A growing share of homeowners in NAR’s first quarter HOME survey said now is a good time to sell, but until an increase in listings actually occurs, home prices will continue to move hastily.”
This monthly drop is no surprise to the market considering January’s drop in pending home sales, which hit the lowest level in a year. In fact, Ten-X predicted February’s existing home sales would fall between annual rates of 5.34 to 5.69 million with a targeted number of 5.51 million.
The median existing-home price for all housing types increased 7.7% annually to $228,400. The increase marks the fastest pace since January 2016 and marks the 60th month of year-over-year gains.
Housing inventory did see an increase of 4.2% to 1.75 million existing homes available for sale, but it is still 6.4% below last year’s levels and has fallen annually for 21 consecutive months. Unsold inventory sits at a 3.8-month supply at the current sales pace.
However despite this increase, one economist who served as Fannie Mae’s chief economist for over 20 years sees little good news, saying the increase was only seasonal.
“While the number of homes for sale rose slightly, that was a seasonal move and they are down by 6.4% from a year earlier,” Nationwide Chief Economist David Berson said. “The month’s supply of homes for sale, a measure of the inventory to sales ratio, was a very low 3.8 months.”