Existing Home Sales Soared in February

• Sales of existing homes rose a very strong 14.5% to 4.58 million annualized units in February from the prior month.
• Total housing inventory at the end of February was unchanged at 980,000 units.
• Strong housing data released in recent months will put more pressure on the Fed to continue its hiking cycle.

Sales of existing homes rose more than expected in February after declining for twelve straight months. Existing-home sales surged 14.5% to 4.58 million annualized units, from 4.00 million annualized units in the prior month, according to the National Association of Realtors. This means 4.58 million units would be sold in 2023 if sales were at the same pace as they were in February. This was more than consensus expectations for a 5.0% increase to 4.20 million units. Sales were up on a month-over-month basis in all four major U.S. regions. Sales fell on a year-over-year basis in all regions.

The median existing-home sales price for all housing types decreased by 0.2% to $363,000 from $363,700 in February 2022. The median existing single-family home sales price was $367,500 in February, down 0.7% from February 2022. The median existing condo and co-op price was $321,000, an annual increase of 2.5%. Properties remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022.

In separate reports released in recent weeks, housing starts and permits increased significantly in February and homebuilder confidence edged up in March. The improvement in housing activity in recent months could be an inflection point and this would add even more pressure on the Fed to continue its hiking cycle at its meeting today and tomorrow. Mortgage rates have declined in recent weeks as the recent bank failures led to a flight to safety and demand for U.S. Treasurys grew. In addition, the recent turmoil in the banking sector could cause banks to tighten lending standards which would further weaken the housing market and slow the U.S. economy. Despite the improvement in February, housing activity will likely weaken through this year due to elevated mortgage rates, deteriorating affordability, and elevated recession risks.