By Manuel Gutierrez, Consulting Economist to NKBA
Existing home sales jumped by 14.5 percent to 4.58 million homes sold (seasonally adjusted annual rate) in February, according to the National Association of Realtors. This increase was a remarkable reversal from the preceding 12 consecutive monthly declines — and also the biggest monthly increase since July 2020, when home sales were recovering from the pandemic economic shutdown.
- Despite February’s increase, sales for the month were 22.6 percent lower year-over-year. Sales were also 32 percent lower than the post-shutdown peak selling rate of 6.73 million in October 2020.
- All four regions contributed to the February increase, with the West showing the biggest jump, up 19.4 percent to a 860 thousand homes selling rate. The South saw the second largest gain, increasing by 15.9 percent to a 2.11 million rate, followed by the Midwest, up 13.5 percent to a 1.09 million rate. The Northeast saw the smallest increase by just 4 percent to a 520 thousand rate.
- Home prices fell in February to a median of $363 thousand, 0.2 percent lower than a year earlier. This was the first year-over-year decline in selling prices in more than ten years — the last time home prices dropped year-over-year was in February 2012, when they fell by a similar 0.3 percent.
- Year over year, median prices fell in two regions: by 5.6 percent in the West to a median of $541 thousand, and by 4.5 percent in the Northeast to a median of $366 thousand. In contrast, median prices in the Midwest were up 5 percent to just $261 thousand, reflecting the significantly lower home prices in the region, followed by South prices, up 2.7 percent to a median of $342 thousand.
- If February’s increase in home sales is sustained over the next few months, remodeling spending could reverse the slowdown in homeowner improvement expenditures predicted in Harvard’s Joint Center for Housing Studies’ Leading Indicator of Remodeling Activity (LIRA) released in January 2022. This may be because, when someone buys an existing home, they are often likely to make changes to suit their lifestyles or tastes.
