US home sales rose in February as mortgage rates eased and more homes
put up for sale
[March 21, 2025] By
ALEX VEIGA
LOS ANGELES (AP) — Sales of previously occupied U.S. homes rose in
February as easing mortgage rates and more properties on the market
encouraged home shoppers.
Existing home sales rose 4.2% last month from January to a seasonally
adjusted annual rate of 4.26 million units, the National Association of
Realtors said Thursday.
Sales fell 1.2% compared with February last year, ending a string of
five straight annual increases. The latest home sales topped the 3.92
million pace economists were expecting, according to FactSet. On an
unadjusted basis, sales fell 5.2% from February last year, when the
month included an extra day because 2024 was a leap year.
Home prices increased on an annual basis for the 20th consecutive month.
The national median sales price rose 3.8% in February from a year
earlier to $398,400, an all-time high for the month of February. All
told, the U.S. median home sales price is up 47% over the last five
years.
“Home buyers are slowly entering the market,” said Lawrence Yun, NAR’s
chief economist. “Mortgage rates have not changed much, but more
inventory and choices are releasing pent-up housing demand.”
The U.S. housing sales began to slump in 2022, when mortgage rates began
to climb from pandemic-era lows. Sales of previously occupied U.S. homes
fell last year to their lowest level in nearly 30 years.
While the average rate on a 30-year mortgage briefly fell to a 2-year
low last September, it didn’t stay there long, climbing to just above 7%
by mid-January. Mortgage rates mostly declined since then, sliding to an
average of 6.76% by the last week of February. The rate averaged 6.67%
this week, according to mortgage buyer Freddie Mac.
That’s more than double the 2.65% record low that the average rate
reached a little over four years ago.
A lag of a month or two usually exists between when a contract is signed
and when the home sale is finalized, so the recent pullback in rates may
point to improved sales this month as the spring homebuying season gets
going.
Still, Yun said a survey of NAR member real estate agents showed that
buyer traffic was down in February from a year earlier, while seller
traffic was up.
”(The) market clearly needs lower interest rates to fundamentally lift
it a little higher on a sustained basis,” Yun said.
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A for sale sign stands outside a single-family home Thursday, June
27, 2024, in Englewood, Colo. (AP Photo/David Zalubowski, File)
 Rising home prices and elevated
mortgage rates, which can add hundreds of dollars a month in costs
for borrowers, have frozen out many would-be homebuyers and
discouraged homeowners who locked in ultra-low mortgage rates a few
years ago from selling.
These trends have made it especially tough on first-time buyers, as
they don’t have equity from an existing home to put toward a new
home purchase.
Even so, they accounted for 31% of all homes sold last month, up
from 28% in January and 26% in February last year. The annual share
of first-time buyers fell last year to a record-low 24%. It’s been
40% historically.
Homebuyers who paid all cash for a home accounted for 32% of sales
last month, up from 29% in January, NAR said.
Those who can afford to buy at current home loan rates or to
sidestep them entirely by paying cash also stand to benefit from a
wider selection of properties on the market.
There were 1.24 million unsold homes at the end of last month, up
5.1% from January and up 17% from February last year, NAR said.
That translates to a 3.5-month supply at the current sales pace,
unchanged from January and up from a 3-month pace at the end of
February last year. Traditionally, a 5- to 6-month supply is
considered a balanced market between buyers and sellers.
Yun said the months’ supply shows the housing market remains tight,
adding he would like to see 30% more homes for sale for the market
to be more balanced between buyers and sellers.
“In the spring and summer months, we will have more inventory,” he
said.
One reason the inventory of homes for sale has been rising is
properties are taking longer to sell.
Homes typically remained on the market for 42 days last month before
selling, up from 41 days in January and 38 days in February last
year, NAR said.
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