Sales of previously owned homes declined in February after rising a month earlier to the highest level in a decade, according to figures released Wednesday from the National Association of Realtors in Washington.
Contract closings dropped 3.7% to a 5.48 million annual rate (the forecast was 5.55 million). The median sales price jumped 7.7% from a year earlier to $228,400. The inventory of available properties fell 6.4% from February 2016 to 1.75 million, making it the 21st straight year-over-year decline.
Housing demand is being restrained by a limited inventory of homes for sale that's pushed property values higher. The jump in home prices from a year earlier far exceeded the gain in wage growth during the month. That's putting purchases out of reach for some buyers at the same time higher borrowing costs are impacting affordability. Still, properties typically stayed on the market for 45 days as of February compared with 59 days on average a year ago, indicating demand remains solid.
"The speed of transactions is very fast and we know that there's an inventory shortage," Lawrence Yun, NAR's chief economist said at a press conference as the figures were released. "Buying interest remains very solid and strong but we have a bottleneck. We don't have enough inventory to satisfy that buying interest."
February sales fell in three of four regions and rose in the South. At the current pace, it would take 3.8 months to sell the houses on the market, compared with 4.3 months in February of last year. The Realtors group considers less than a five-month supply as consistent with a tight market.
Single-family home sales fell 3% to an annual rate of 4.89 million on a monthly basis. Purchases of condominium and co-op units dropped 9.2% percent to a 590,000 pace. First-time buyers accounted for 32% of all sales, compared with 33% in the prior month. Of homes sold in February, 42% were on market for less than a month.
