- After declining the previous month, existing home sales surged 11.8% to 5.51 million units (annualized) in February. The outturn was better than the consensus forecast that called for a 3.2% showing.
- The gain was concentrated in the single-family market segment. Single-family sales were up 13.3% from the previous month while condo/co-op sales were largely unchanged.
- Home resales were up in three of the four regions, led by a 16.0% increase in the West, followed by 14.9% in the South and 9.5% in the Midwest. Sales in the Northeast were unchanged.
- The number of homes available for sale rose 2.5% to a seasonally unadjusted 1.63 million units from 1.59 million in January, which at the current sales rate, puts supply at just 3.5 months (down from 3.9 in January).
- Median existing home prices advanced 3.6% from year ago levels, slightly ahead of the 3.5% outturn in January.
Key Implications
- Existing home sales rebounded nicely from three straight months of declines, posting the largest month-on-month gain since December 2015. While one month does not a trend make, the strength of the increase is promising and suggests that last year’s lackluster performance in the housing sector will not be repeated.
- Home sales faced significant headwinds in 2018, including rising mortgage rates and a lack of affordable inventory in both the new and resale market. The recent declines in mortgage rates, along with rising household income should bring more buyers to the market in coming months.
- All said, the report was good news for the U.S. housing market. Still, while demand conditions have improved, the market continues to struggle with low supply, which may keep a lid on sales growth.
