Despite a dearth of properties on the market, sales of existing homes rebounded in February, according to a recent report.
After a dip in the number of closings in December and January, about 5.54 million existing homes (which have previously been lived in) were sold in February, according to the most recent National Association of Realtors® report. That represents a 3% rise from January and a 1.1% increase from the same month a year earlier.
"Sales are being driven in the West and the South," says Chief Economist Danielle Hale. That's an indirect result of builders putting up more new residences in those regions. "Inventory is still low in those areas, but the new construction created opportunities for existing-home owners to trade up. It’s leading to faster turnover.”
Indeed, existing-home sales were up 11.4% month over month in the West. They also rose 2.4% year over year. In the South, they jumped 6.6% from January and 3.4% from the same month a year earlier.
However, sales were down in the Midwest, sliding 2.4% from the previous month to the same level as one year ago. In the Northeast, they fell 12.3% from January and 7.2% from February 2016.
Single-family homes, those stand-alone abodes that typically come with a yard out back, saw the biggest jumps. Sales were up 4.2% monthly and 1.8% annually.
But it's still too early to tell what this means for the rest of the year.
"March is where we really start to see a pickup in closings," says Hale. "And March is really the bellwether for the year as far as how the home-selling season is going to go.”
Sale prices also edged up just a little to reach $241,700 in February, according to the report. That's a 0.37% rise from January and a 5.9% jump from February 2017.
However, they were still quite a bit cheaper, by 33.6.%, than the median cost of a newly constructed home, at $323,000 in January, according to the most recent data available from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
About 53.6% of all existing homes sold in February were closed on for $250,000 or less, according to NAR. About 33.6% were between $250,000 to $500,000 and an additional 10.3% cost between $500,000 and $1 million. Only 2.5% of all sales were for $1 million or up.
“The very healthy U.S. economy and labor market are creating a sizable interest in buying a home in early 2018," Lawrence Yun, NAR's chief economist, said in a statement. "However, even as seasonal inventory gains helped boost sales last month, home prices—especially in the West—shot up considerably. Affordability continues to be a pressing issue because new and existing housing supply is still severely subpar."