February 2018 Existing Home Sales

Sales of existing homes improved in February 2018 according to the National Association of Realtors.  Jumping 3.0 percent to 5.54 million units on an annualized basis, the uptick nearly made up for the 3.2 percent decline in January and is the first rise in three months.  This latest monthly increase did wonders for the year-over-year trend which turned positive to 1.1 percent after being negative in the prior release. 

Price proxies were mixed in February but only moved marginally.  The average home price declined $1,400 to $281,200.  However, the median-priced home increased $900 to $241,700.  Both price proxies have been mostly lower since June 2017; despite the recent weakness in the monthly figures, the year-over-year trends remain positive.  The median price is 5.9 percent higher than in the same period last year, and the average price moved up 4.3 percent during the same time.

Mortgage rates continued moving higher in the period.  Rising for the fifth consecutive month, the average commitment rate for a 30-year, conventional, fixed-rate mortgage reached 4.33 percent according to Freddie Mac.  This lending rate was 4.03 percent in January and averaged 3.99 percent in all of 2017.  February’s uptick put this measure of lending rates at the highest level since April 2014.

Inventory figures skewed higher but remain low. Roughly 70,000 additional homes came to market in the period, bringing the total units for sale to 1.59 million.  Based on the current transaction pace, the stock of existing homes would be depleted in just 3.4 months if no other supply was added, matching January’s tally.

Sales of existing homes are tepid.  Sparse inventories and rising interest rates are not helping matters.  These headwinds could continue holding this portion of the economy back.  Mortgage rates seem to have pushed a little higher in March, but we will have to see about supply when the NAR makes their next release for this housing indicator at the end of this month.