Existing home sales tumble 7% as inventory, price concerns are 'burdening' potential buyers
- Existing home sales dropped 7.1% between January and February to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors reported Monday.
- Along with the dip in overall sales, the share of first-time buyers slipped to 30% last month — down from 32% in January but higher than the 29% rate in February 2015.
- The median existing-home price in February was $210,800 — 4.4% higher than the same time last year. February marked the 48th consecutive month of year-over-year gains in existing-home prices.
February's results came in worse than expected, as economists had predicted existing home sales would dip 2.9% in February to an annualized rate of 5.31 million, according to Business Insider.
The NAR cited "unshakably low supply levels and steadfast price growth" as the main factors contributing to the drop in existing home sales. Tight inventory and rising prices have been ongoing concerns for the residential industry.
"The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February's lack of closings," Lawrence Yun, NAR's chief economist, said in a release. "However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers."
Yun added that despite strong job growth across the U.S., many potential homebuyers are wary about making a major home purchase. An NAR survey released earlier this month found that fewer renters think now is a good time to buy a home, and fewer homeowners said they believe that it's a good time to sell. The NAR advised homebuilders to "double their focus" to build single-family homes to avoid an even tighter inventory problem.
With the exception of Monday's existing home sales report, housing market reports this month have been mostly positive. Homebuilder confidence held steady at a score of 58, and housing starts rose 5.2% in February to a 1.18 million annualized rate.