Existing home sales in the US rose 1.7% over the month to an annualized rate of 4.09 million in February, above market forecasts for 3.89 million. This was a step up from 3.91 million in January. Overall existing home sales were still down 1.4% over the year. Home prices continued to accelerate, rising 0.3% over the year to a median sales price of $398,000, the 32nd consecutive month of price increases. Housing inventory rose to a 3.8 months supply, unchanged from January and up from 3.6 months a year ago.
The ABA Office of the Chief Economist sees the gain in existing home sales being driven by improved affordability. While home prices continue to grow, wage growth is now outpacing home price appreciation, and mortgage rates are at their lowest levels in over a year. A pickup in home resale activity should lead to increased mortgage originations, while lower rates could lead to a resurgence in refinancing activity. However, with the outlook for Fed rate cuts beginning to pull back, the extent to which mortgage rates will decline further may be limited.
