U.S. Existing-Home Sales Surge 11.8% in Best Gain Since 2015

(Bloomberg) -- Sales of previously owned U.S. homes rebounded in February to the fastest pace in almost a year, topping estimates and snapping a three-month streak of declines to offer a robust indication that the housing market is stabilizing after last year’s slump.

Contract closings increased 11.8 percent, the most since 2015, from January’s pace to a 5.51 million annual rate, the National Association of Realtors said Friday, exceeding all forecasts in a Bloomberg survey that had called for 5.1 million. The median sales price climbed 3.6 percent from a year earlier.

U.S. Existing-Home Sales Surge 11.8% in Best Gain Since 2015

Key Insights

  • The surprisingly strong gain, which was driven entirely by single-family homes, indicates that the lowest mortgage rates in a year, resilient consumer sentiment, and the Federal Reserve’s pledges to remain patient on interest-rate increases are helping to stabilize housing markets after sales tumbled in 2018.
  • Single-family home sales jumped 13.3 percent to a 4.94 million pace amid strong gains in the South and West. The pace of condo sales was unchanged at 570,000.
  • It may take some time to determine whether the rebound is sustainable or mainly reflected a boost on pent-up demand from buyers who were waiting for more attractive mortgage rates. Low supplies could act as a constraint on sales, and purchases were still down from a year earlier.
  • Other recent reports have shown new-home construction rebounded in January while sales of new single-family houses cooled. Home-price gains have also been generally decelerating since early 2018.

Official’s View

  • “Without a doubt, the lower interest rates have reignited home-buying interest,” NAR Chief Economist Lawrence Yun said at a briefing in Washington, citing stronger readings in the University of Michigan and Conference Board consumer sentiment surveys. “This was a very strong pace for home sales.”

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  • Home purchases advanced in three of four regions, led by a 16 percent gain in the West. The Northeast was unchanged.
  • At the current pace, it would take 3.5 months to sell all the homes on the market, compared with 3.9 months in January; Realtors see anything below five months of supply as a sign of a tight market.
  • First-time buyers accounted for 32 percent of sales, up from 29 percent the prior month.
  • Existing-home sales account for about 90 percent of U.S. housing and are calculated when a contract closes. New home sales make up the remaining 10 percent and are counted when contracts are signed.

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