Sales of previously occupied US homes rose in February as easing mortgage rates and more properties on the market encouraged home shoppers.
Existing home sales rose 4.2% last month from January to a seasonally adjusted annual rate of 4.26 million units, the National Association of Realtors said Thursday.
Sales fell 1.2% compared with February last year, ending a string of five straight annual increases.
The latest home sales topped the 3.92 million pace economists were expecting, according to FactSet.
On an unadjusted basis, sales fell 5.2% in February last year, when the month included an extra day because 2024 was a leap year.
Home prices increased on an annual basis for the 20th consecutive month. The national median sales price rose 3.8% in February from a year earlier to $398,400, an all-time high for the month of February.
“Home buyers are slowly entering the market,” said Lawrence Yun, NAR’s chief economist. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”
The US housing sales began to slump in 2022, when mortgage rates began to climb from pandemic-era lows. Sales of previously occupied US homes fell last year to their lowest level in nearly 30 years.
While the average rate on a 30-year mortgage briefly fell to a 2-year low last September, it didn’t stay there long, climbing to just above 7% by mid-January.
Mortgage rates mostly declined since then, sliding to an average of 6.76% by the last week of February.
The rate averaged 6.65% last week, according to mortgage buyer Freddie Mac.
That’s more than double the 2.65% record low that the average rate reached a little over four years ago.
Still, the overall dip in rates in recent weeks is a welcome, if modest, relief for would-be home shoppers as the spring homebuying season gets going.
Those who can afford to buy at current home loan rates or to sidestep them entirely by paying cash also stand to benefit from a wider selection of properties on the market.
There were 1.24 million unsold homes at the end of last month, up 5.1% from January and up 17% from February last year, NAR said.
That translates to a 3.5-month supply at the current sales pace, unchanged from January and up from a 3-month pace at the end of February last year.
Traditionally, a 5- to 6-month supply is considered a balanced market between buyers and sellers.
One reason the inventory of homes for sale has been rising is properties are taking longer to sell.
Homes typically remained on the market for 42 days last month before selling, up from 41 days in January and 38 days in February last year, NAR said.
