Home sales rose 0.8% in February, the National Association of Realtors said Wednesday, improving for the third month in a row as the housing market grapples with higher mortgage rates, higher prices and a limited supply of homes for sale.
February’s gain follows January’s 8.1% rise, when unseasonably warm weather and declining mortgage rates encouraged buyers to come out in force. However, contracts for future purchases are still down 21% from a year ago levels.
“After nearly a year of contraction, the housing sector is coming to an end,” said Lawrence Yun, chief economist at NAR. “Existing-home sales, pending contracts and pending contracts for new-home construction have turned the corner and climbed over the past three months.”
Three out of four regions of the country saw an increase in sales, with only the West registering a decline.
“Affordable US regions — the Midwest and the South — are leading the recovery,” Yun said. “Mortgage rates have improved in recent weeks after the federal government guaranteed the status of most mortgages amid uncertainty in the financial market.”
“While access to commercial mortgage loans may become increasingly difficult, residential mortgage loans are expected to become more readily available,” Yun said.
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Although there have been conflicting accounts of consumer health, Wells Fargo economists said in a report Wednesday that Americans are still sitting on $800 million in additional savings built up during the coronavirus pandemic. And while many homeowners are sitting on mortgages that are nearly half the rate of today’s new mortgages, they are unwilling to sell, there are some signs that buyers and sellers are getting closer to their expectations.
“Because contract signings occur before home sales, today’s data suggests that the February pick-up in home sales may not be a one-off, especially given the combo of higher rates and higher home prices in home sales.” has begun to ease in response to the affordability constraints of offers,” Danielle Hale, chief economist at Realtor.com, said before the report was released.
A fly in the ointment is the banking crisis that has emerged in recent weeks following the collapse of Silicon Valley Bank and two other financial institutions. But federal regulators told the Senate Banking Committee on Tuesday that the system remains safe and sound and that the outflow of deposits has stabilized.