Existing-home sales dropped in February as tight inventory and weakening affordability conditions kept many buyers out of the market in the majority of parts of the country, the National Association of REALTORS® reports. Total sales for existing single-family homes, town homes, condos, and co-ops fell 3.7 percent to a seasonally adjusted annual rate of 5.48 million, in comparison to 5.69 million in January, based on the report. However, the speed of sales in February remained 5.4 % above a year ago.
Property Sales Decline Within Inventory, Affordable Challenges
“REALTORS® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” says NAR chief economist Lawrence Yun. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
Below are a few key indicators of the housing market in February from NAR’s latest report. Home prices: The median existing-home price for all housing types was $228,400-up 7.7 percent from a year ago ($212,100). Inventories: Total housing inventory rose 4.2% to 1.75 million existing homes available for sale, but that is still 6.4 percent less than a year ago (1.87 million).
Unsold inventory is at a 3.8-month supply at the current sales pace. Inventories have dropped year over year for 21 consecutive months. Distressed sales: Foreclosures and short sales made up 7 percent of sales for the third consecutive month and are below 10 percent a year ago. 6 % of sales were foreclosures, and 1 % were short sales.
Foreclosures were discounted an average 18% below market value, while short sales were discounted 17 %. Days on the market: 42% of homes sold in February were on the market for under a month. Typically, properties stayed on the market for 45 days, down considerably from a 59-day average this past year. Short sales were on the market the longest, at a median of 214 days in February; foreclosures sold in 49 days on average; and non-distressed homes took an average of 45 days.
All-cash sales: All-cash transactions included 27% of sales. That’s an increase from 25 percent this past year and is the highest level since November 2015. Individual investors, who account for the majority of cash sales, purchased 17 % of homes, down from 18% last year. “The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” Yun says. “Investors are still making up an above-average share of the market right now, despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg up on the competition against first-time buyers.”
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