Sales of existing homes declined 0.4% in February to a seasonally adjusted annual rate of 4.6 million, the National Association of Realtors reported Thursday. Sales rates have trended down since the summer as rising mortgage rates and home prices cut affordability. Constrained inventory and unusually poor weather may have also a played a role in weak buying, the trade group said.
In addition to dropping affordability, home sales face headwinds from new mortgage rules for would-be buyers and lenders, and stringent lending standards The bad weather conditions make it tough to clearly identify recent underlying trends in the data.
But buyers also face rapidly rising prices. The median sales price of used homes hit $189,000 in February, up 9.1% from the year-earlier period, as inventory remains tight, the trade group said. February’s inventory was 2 million existing homes for sale, a 5.2-month supply at the current sales pace.
Even before the Fed’s Wednesday announcement, a report this week showed that homebuilders remain pessimistic this month about sales trends.
There may be better housing news in coming months: Residential projects and purchases delayed during a particularly tough winter could show up in the spring. Indeed, two of the country’s largest builders, Lennar and KB , reported jumping revenue for the first fiscal quarter, according to financial documents released this week. The all-important spring selling season for the building industry might get off to a “reasonable start” after an unusually harsh winter, one analyst said.
And there are positive factors that could support sales this year. Some banks are making it easier to obtain a mortgage, hungry for the mortgage revenue that they lost when refinancing applications plunged last year. Also, pent-up demand remains high even as housing inventory remains low. And the pipeline of foreclosures is dropping.