What drove a near-12% spike in US home sales last month?

The year started poorly for exiting home sales south of the border but February appears to have been met with renewed optimism for homebuying.

Demand for existing homes across much of the US gathered pace in February with national sales up 11.8% from the previous month as three of the major regions posted gains while sales in the Northeast were flat.

Although sales were down 1.8% from a year ago (5.61 million in February 2018), it was the largest monthly rise since December 2015 and the National Association of Realtors says the increase to a seasonally adjusted annual rate of 5.51 million was down to several factors converging.

"A powerful combination of lower mortgage rates, more inventory, rising income and higher consumer confidence is driving the sales rebound," said NAR chief economist Lawrence Yun.

First time buyers made up 32% of buyers in February.

Prices were also up with the national median rising 3.6% year-over-year to $249,500 and marking the 84th straight months of annual gains.

Inventory grew
There were 1.63 million existing homes available for sale at the end of February, a 3.2% increase from a month earlier.

Unsold inventory was at a 3.5-month supply at the current sales pace, down from 3.9 months in January but up from 3.4 months in February 2018.

Properties remained on the market for an average of 44 days in February, down from 49 days in January but up from 37 days a year ago and 41% of homes sold in less than a month.

"For sustained growth, significant construction of moderately priced-homes is still needed. More construction will help boost local economies and more home sales will help lessen wealth inequality as more households can enjoy in housing wealth gains," urged Yun.

 

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