Sales of Preowned US Residences Soar to Highest Level in a Year

the US housing market, sales of preowned residences

In a significant upturn for the US housing market, February witnessed a remarkable surge in the sales of previously owned residences, marking the fastest pace in a year. This surge suggests a promising trend. It’s accompanied by a notable increase in listings, indicating that both buyers and sellers are adjusting to the current landscape of higher mortgage rates.

Data Highlights

According to the latest data released by the National Association of Realtors on Thursday, contract closings experienced a substantial 9.5% increase compared to the previous month. This surge brought the annualized rate to 4.38 million. Notably, this figure surpassed all expectations laid out in a comprehensive survey of economists conducted by Bloomberg.

“Thursday’s report from NAR reveals a robust 9.5% spike in contract closings, reaching 4.38 million annually, exceeding forecasts,” according to Bloomberg Subscription.

Market Resurgence

This robust performance signals a significant breakthrough for the resale market, which had been grappling with prolonged stagnation primarily attributed to elevated mortgage rates. These rates had dissuaded many homeowners from contemplating relocation. This was particularly evident when faced with the prospect of relinquishing lower rates secured in recent years.

Homeowners’ Perspective Shift

There are indications that homeowners are gradually coming to terms with the reality of stabilized mortgage rates. They are realizing that further delay in moving might not be viable. Lawrence Yun, Chief Economist at the National Association of Realtors, emphasized during a press briefing that this shifting perspective has led to an uptick in property listings. This surge in listings has driven inventory levels to their highest mark for any February since 2020.

Outlook for Mortgage Rates

The outlook for mortgage rates later this year appears optimistic, with expectations of a decline when the Federal Reserve is anticipated to implement interest rate cuts. Federal Reserve Chair Jerome Powell, in a recent statement, reiterated the central bank’s forecast for three rate cuts in 2024. This underlines their commitment to stimulating economic growth.

Inventory and Pricing Trends

The inventory of previously owned homes for sale surged to approximately 1.07 million last month, with expectations of a continued upward trend. However, despite this increase in inventory, strong demand continues to exert upward pressure on prices. The median selling price saw a notable 5.7% rise compared to the previous year, reaching $384,500. This marks the highest figure for any February since 1999.

Market Dynamics

Yun also highlighted that in the US housing market, a significant portion of homes (20%) were sold above the listed price, underscoring the prevalence of multiple offers in the current market. Cash transactions represented a substantial one-third of total deals, with investors and second-home buyers comprising 21% of the market.

Future Outlook

Existing-home sales, which constitute the majority of transactions, are based on finalized contracts. Data on new-home sales, reflecting contract signings, are eagerly awaited next week. Additionally, data released on Thursday showed that initial applications for US unemployment benefits remained close to historically low levels. Last week’s figures indicate a sustained trend in job market stability. This further bolsters confidence in the robustness of the US economy amidst these favorable housing market trends.

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