Bloomberg News

National Mortgage News Article

Sales of previously owned U.S. homes fell in February by more than forecast to a six-month low as a limited supply of properties and high prices deterred potential buyers.

Contract closings decreased 7.2% in February from the prior month to an annualized 6.02 million, figures from the National Association of Realtors showed Friday. The median forecast in a Bloomberg survey of economists called for a 6.1 million annualized rate in February. The monthly drop was the biggest in a year.

“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” Lawrence Yun, NAR’s chief economist, said in a statement Friday.

The slide in sales reflects a market still constrained by a lack of inventory, which in February was the second-lowest on record. Buyers are bidding up prices on the few homes available. Meantime, affordability is showing signs of worsening, especially among first-time buyers.

Builders are facing high materials costs, especially in the wake of Russia’s invasion of Ukraine, and mortgage rates already at an almost three-year high will keep climbing as the Federal Reserve tightens policy. Meantime, broad-based inflation is driving up the costs of necessities like gasoline, food and rent.

The NAR data showed that the number of homes for sale rose from a month earlier -- typical this time of year -- but were still 15.5% lower than a year ago. At the current pace it would take 1.7 months to sell all the homes on the market, close to a record low. Realtors see anything below five months of supply as a sign of a tight market.

The median selling price rose 15% from a year earlier, to $357,300 in February.

First-time buyers accounted for 29% of sales last month, down from 31% a year earlier. Yun said at current rates, monthly mortgage payments are up 28% from February last year.

Digging Deeper

All four regions posted sales declines, led by sizable drops in the Northeast and Midwest

Properties remained on the market for an average of 18 days last month, compared to 20 days a year earlier

Existing condominium and co-op sales fell 9.5%; sales of single-family homes declined 7%

Cash sales represented 25% of all transactions in February and investors made up 19% of the market

Existing-home sales account for about 90% of U.S. housing and are calculated when a contract closes. New-home sales, which make up the remainder, are based on contract signings and February data will be released next week.