Sales of previously owned homes rose more than expected in the first gain in three months, indicating that job gains and tax cuts are supporting demand despite low supply, National Association of Realtors data showed Wednesday.
Contract closings increased 3% month-over-month to a 5.54 million annual rate (the estimate was 5.4 million) from an unrevised 5.38 million. The median sales price rose 5.9% year-over-year to $241,700. The inventory of available properties declined 8.1% year-over-year to 1.59 million, the lowest for February in data going back to 1999.
The results indicate that even with a low supply of homes for sale and rising borrowing costs, demand is being driven by a strong labor market and steady income gains. At the same time, first-time buyers are still struggling to purchase, as the group accounted for 29% of sales in February, down from 32% a year earlier.
Existing-home sales account for 90% of the market and are calculated when a contract closes. New-home sales, considered a timelier indicator though their share is only about 10%, are tabulated when contracts get signed.
"There's no letup in home-price growth, another testament to the solid, strong housing demand in the marketplace," Lawrence Yun, NAR's chief economist, said in a conference call with reporters. "If prices were weakening that may be signaling a possible turning point but we are not really seeing that." Inventory conditions remain "very tight," he said.
Purchases rose 11.4% in the West, 6.6% in the South; fell 12.3% in the Northeast, 2.4% in the Midwest At the current pace, it would take 3.4 months to sell the homes on the market, unchanged from January. The Realtors group considers less than a five-month supply as consistent with a tight market. Single-family home sales increased 4.2% last month to an annual rate of 4.96 million.
Purchases of condominium and co-op units declined 6.5% to a 580,000 pace. First-time buyers made up 29% of all sales in February, unchanged from prior month. Homes sold in 37 days, compared with 41 days in January and 45 days in February 2017.
