Photographer: Chris Rank/Bloomberg

U.S. Existing-Home Sales Rebound Even as Inventory Remains Tight

Sales of previously-owned U.S. 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.

Highlights of Existing-Home Sales (February)

  • Contract closings increased 3% m/m to 5.54m annual rate (est. 5.4m), from unrevised 5.38m
  • Median sales price rose 5.9% y/y to $241,700
  • Inventory of available properties declined 8.1% y/y to 1.59m; lowest for Feb. in data going back to 1999

Key Takeaways

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 percent of sales in February, down from 32 percent a year earlier.

Existing-home sales account for 90 percent of the market and are calculated when a contract closes. New home sales, considered a timelier indicator though their share is only about 10 percent, are tabulated when contracts get signed.

Official’s View

“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.

Other Details

  • Purchases rose 11.4 percent in West, 6.6 percent in South; fell 12.3 percent in Northeast, 2.4 percent in Midwest
  • At the current pace, it would take 3.4 months to sell the homes on the market, unchanged from January; Realtors group considers less than a five months’ supply as consistent with a tight market
  • Single-family home sales increased 4.2 percent last month to an annual rate of 4.96 million
  • Purchases of condominium and co-op units declined 6.5 percent to a 580,000 pace
  • First-time buyers made up 29 percent 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

— With assistance by Chris Middleton, and Vince Golle

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