Home sales drop in February as inventory remains at all-time low

Sales of existing homes up 9% from a year ago

National /
Mar.March 22, 2021 12:30 PM
(iStock/Illustration by Kevin Rebong for The Real Deal)

(iStock/Illustration by Kevin Rebong for The Real Deal)

The spike in home prices may have finally caught up to eager buyers.

Existing home sales fell 6.6 percent in February to a seasonally adjusted rate of 6.22 million from January’s rate of 6.69 million, according to the National Association of Realtors’ monthly report. It’s the first month-over-month decline since November, and it affected every region NAR tracks except the west.

Analysts expected last month’s rate of sales to drop, but forecasted only a 2.8 percent decrease compared to January’s levels.

Lawrence Yun, NAR’s chief economist, attributed February’s results to historically low inventory, unchanged from January’s 1.03 million units on the market. Meanwhile, home prices continued to rise: The median sales price increased for the 108th consecutive month to $313,000. That’s up nearly 16 percent from a year ago.

“Home affordability is weakening,” Yun said in a statement. “Various stimulus packages are expected and they will indeed help, but an increase in inventory is the best way to address surging home costs.”

At February’s pace of sales, there is two months’ worth of supply on the market, a dip from the 3.1 months’ worth of inventory available at the same time last year.

Homebuilders appear to be on a different page from buyers: Housing starts dropped 10.3 percent in January and market sentiment among builders dropped for the third time in four months in February. Soaring lumber prices are partly to blame for the decrease.

Despite the drop-off in buyer activity, last month’s rate of sales was still up 9.1 percent from a year ago.

Yun pointed to the year-over-year gains, which occurred in every regional market, to back up his view that home sales will be higher in 2021 than in 2020.

“The nation is on the cusp of returning to a sense of normalcy,” he said. “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.”

At the same time, mortgage rates have begun to increase and prices remain elevated, lowering the likelihood that lower-income buyers will be able to purchase homes — particularly as many were increasingly shut out of the housing market last year.






    Related Articles

    arrow_forward_ios
    (iStock)
    South Florida resi construction starts soar in March
    South Florida resi construction starts soar in March
    Eden Multifamily heads Jay Massirman and Jay Jacobson with Cypress Equity Investments CEO Michael Sorochinsky (rendering courtesy of MSA Architects)
    Eden Multifamily, Cypress Equity score $24M construction loan for Tamarac apartments
    Eden Multifamily, Cypress Equity score $24M construction loan for Tamarac apartments
    (iStock)
    Home prices across globe hit records, prompting worries of bubble
    Home prices across globe hit records, prompting worries of bubble
    Steven and Beth Millner with One Thousand Ocean (Patrick McMullan/Getty, Google Maps)
    Private equity honcho pays $5M for Boca Raton condo
    Private equity honcho pays $5M for Boca Raton condo
    From left: Jim Cohen, Nancy Corey, Nathan Zeder, Alicia Cervera Lamadrid, Phil Gutman and Mike Pappas (iStock)
    South Florida’s pandemic-fueled residential market poised for bull run in 2021
    South Florida’s pandemic-fueled residential market poised for bull run in 2021
    Kathleen DuRoss Ford and 300 North Lake Way (Getty, Google Maps)
    Kate Ford’s Palm Beach estate sells for $55M
    Kate Ford’s Palm Beach estate sells for $55M
    Lennar Executive Chairman Stuart Miller (iStock)
    “The home used to be just shelter. Now it is the hub of our entire lives”: Lennar reports strong Q4, full-year results
    “The home used to be just shelter. Now it is the hub of our entire lives”: Lennar reports strong Q4, full-year results
    Rent-to-own startup Divvy Homes expands to South Florida
    Rent-to-own startup Divvy Homes expands to South Florida
    Rent-to-own startup Divvy Homes expands to South Florida
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...