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Fewer homes are available for sale, leading to higher home prices in many markets across the country. Despite this, existing-home sales saw an increase in February after two months of declines. According to the National Association of Realtors (NAR), total existing-home sales reached 5.54 million in February, up 3 percent from January's sales of 5.38 million, and sales are 1.1 percent higher than at the same time last year. The South and West experienced considerable increases in existing-home sales, which more than offset slight declines in the Northeast and Midwest. According to Lawrence Yun, chief economist for the NAR, the positive gains in the labor market along with the consistently improving economy led to an increase in buyer interest. An increase in potential buyers makes now the ideal time to list a home.
By the end of February, there were 1.59 million existing homes available for sale. This is a 4.6 percent increase in inventory levels when compared with January. However, housing supply has fallen year over year for the past 33 months, and February was no exception; inventory fell 8.1 percent from February 2017's total of 1.73 million existing homes. At the current sales pace, unsold inventory would last only 3.4 months; in comparison, a year ago there was a 3.8-month supply. Homeowners looking to sell in the current housing market will be facing less competition for buyers' attention.
Higher Sale Profits
The lack of inventory, particularly in the West, led to an increase in home prices in February. Prices rose 5.9 percent from a year earlier, reaching $241,700. For the past 72 consecutive months, prices have increased year over year; however, higher prices are not deterring home buyers. In February, 46 percent of all homes were sold in less than a month. The average property spent 37 days on the market; in comparison, the average home spent 41 days on the market in January and 45 days in February 2017. The high prices combined with the swift sales pace are ideal market conditions for homeowners looking to list. There are concerns, however, surrounding housing affordability. According to Yun, "Mortgage rates are at their highest level in nearly four years, at a time when home prices are still climbing at double the pace of wage growth." To satisfy buyer demand and improve affordability, most markets across the country need an increase in listings.
Northeast - Existing-home sales annual rate of 640,000; a decrease of 12.3 percent from January 2018 and 7.2 percent from February 2017
Midwest - Existing-home sales annual rate of 1.22 million; a decrease of 2.4 percent from January 2018 and unchanged from February 2017
South - Existing-home sales annual rate of 2.41 million; an increase of 6.6 percent from January 2018 and 3.4 percent from February 2017
West - Existing-home sales annual rate of 1.27 million; an increase of 11.4 percent from January 2018 and 2.4 percent from February 2017