Meandering weakness continues. Sales have gone nowhere for two years.
Note that existing-homes sales are recorded at closing whereas new home sales are recorded at contract signing.
The NAR reports Existing-Home Sales Accelerated 4.2% in February
Six Key Highlights
- Existing-home sales advanced 4.2% in February to a seasonally adjusted annual rate of 4.26 million.
- Sales slipped 1.2% from one year ago.
- Raw sales in February were down 5.2% from last year, which was a leap year with one extra day of business
- Sales are down 32.8 percent from cycle high of 6.34 million in January of 2022.
- The median existing-home price for all housing types in February was $398,400, up 3.8% from one year ago ($383,800). All four U.S. regions registered price increases., the 20th consecutive month of year-over-year price increases.
- Total housing inventory registered at the end of February was 1.24 million units, up 5.1% from January and 17% from one year ago (1.06 million). Unsold inventory sits at a 3.5-month supply at the current sales pace, identical to January and up from 3.0 months in February 2024.
For three straight years we have seen a February bounce in existing-home sales (yellow highlights in charts).
The bounce was in January, four years ago.
The NAR may have a problem with seasonal adjustments.
Existing-Home Sales Percent Change from Year Ago
Existing-home sales are up for the 4th time in five months. This is the first time since 2021.
Existing-Home Sales Percent Change from year Ago
Last month I said “Due to a hard comparison in February, I expect sales to go negative again next month.”
Despite a good report they did. The number to beat for March is 4.12 million.
Long-Term Perspective
Existing-home sales are about where they were in November of 1978.
Existing-Home Sales Supply
Despite seasonal adjustments, the data shows strong seasonal tendencies. This also implies faulty seasonal adjustments.
Closing Thoughts
Seasonal adjustments, especially for February are questionable.
February sales were mostly December or January contracts when optimism over Trump was high. Since then, economic sentiment and homebuilder traffic has soured.
Don’t expect sustained strength looking ahead.
Related Posts
February 19, 2025: Housing Starts Drop 9.8 Percent, Unable to Retain Any Traction
Housing starts have mostly been rangebound since late 2022 as high prices and high mortgage rates dampen demand.
February 25, 2025: US Consumer Confidence Drops at Sharpest Pace in 3-1/2 Years
Consumers are concerned over inflation. Recession should be the bigger fear.
March 17, 2025: The Wells Fargo Housing Market Index Declines Again in March, Dismal Traffic
Homebuilder confidence is lowest level in seven months.
March 15, 2025: The Case-Shiller Home Price Index Hits Another New Record High, Thank the Fed
I have not commented on Case-Shiller for a while. Here is a batch of new charts.
Prices are high but few are buying.
Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
On February 3, I commented Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed
The Fed destroyed liquidity in the housing market with massive QE that allowed existing owners to refinance at cheap rates fueling inflation via permanent lower mortgage rate (extra money in pockets), while screwing all potential new buyers with runaway prices and higher mortgage rates.
So is all of this good or bad for all those renters and young/blacks/latinos that backed Trump? When do they get their goodies in this administration? Asking for a friend….
DEI handouts, you mean?
Prices are still too damn high. Homeowners see other houses selling for top $$$, and say to themselves, why can’t my home sell equally high? I’ll tell you why: because people can’t afford it. They’re not going to bankrupt themselves just to have your particular roof over their heads.
As has been shown time and time again, this is a situation ripe for market correction, but a bubble will be painful for people to face because of the potential equity loss, and the new dose of reality will sting especially fierce because homeowners have come to expect the value of their homes to increase forever.
In desirable Sun Belt cities such as Phoenix, Houston, and Tampa Bay, prices may crater only a bit because of the location of the real estate. But expect places like Cincinnati and Minneapolis to dive hard.
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Then those people are going to keep renting or living in mom and dad’s basement until they can afford it.
Houses have a base cost (land, materials, building codes etc) that’s skyrocketed. I live in Florida and you can drive by all kinds of homes build in another era (50s and 60s) that could never be built today because of code. The people in Cali who just suffered that wildfire disaster are going to find out the same thing.
So no one is going to sell at a loss unless they are absolutely forced (even banks who foreclose tend to hold onto the foreclosure waiting to sell that at a non-loss).
Florida is switching to a buyer’s market. Listing are hanging around for extended periods and price drops have occurred on existing homes. Builders of new homes are offering incentives to move inventory. Insurance issues are exacerbating the problem. Condos are a whole different story due to some massive assessments to inspect and bring older complexes up to code.
Falling rates? Moving out of large houses into bunkers? TDS patients selling and moving to Canada etc?
I expect a certain west coast based econ blogger to twist himself in a pretzel explaining this one. Prices up YoY and months supply hold steady despite the gloom and doom predictions.
The “buyers strike” will end when those “millions of vacant homes” are put up for sale by all those people who bought during the pandemic but did not sell their old house because they wanted to ride prices up. Yeah, that’s the story.
Supposedly there are 1m home loans in default being covered up. Why isn’t Elon doing something about it?
https://www.youtube.com/watch?v=iKdtyDnGM-o
The commercial real estate loans are even worse but it’s sweep everything under the rug because when this mother of all bubbles pops, everyone is going to lose their poop.
No, not homes in default, but homes that were never put on the market after buyers moved into another house. This way they could “ride the prices up”. They’re vacant houses of course, because who needs cash flow? This has been the delusion of a certain blogger for years.
The existing home sales since 1968 chart is the important one for long term trends. That one says that we are back to the 1998 levels which is almost 30 years ago. That’s the trend Wolf looks at.
Meanwhile population has gone from 275 million to 343 million (that we count, who knows how many more illegals since then). That’s a 25% increase in population with no increase in existing home sales.
How do you explain that? We’ve built millions of homes since then. Either they are all rentals (ie we turning into a nation of renters) or people buying 2nd homes and holding onto to them. Unless you have another possibility?
Home ownership is way down since it peaked in 2007 or so. Ohio is a clear example of that. Investors have taken the homes off the market, but they are not vacant.
As far as second homes causing inventory to disappear – Vermont is the poster child for that. The natives have been priced out except for towns that nobody wants to live in.
Currently, the low sales are mostly caused by high mortgage rates compared to the 3% rates a few years ago, keeping low interest mortgage holders in place.
Wolf’s arguments are altogether different and he has been saying the same thing forever: https://wolfstreet.com/2021/04/22/buyers-strike-everyone-knows-the-housing-market-has-gone-nuts-amid-wild-distortions-prices-spike-but-sales-plunge/
So much for the recession scares related to the housing market.
Housing has been very weak since October 2022