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    Existing Home Sales Fell In February But Supply Remains Extremely Tight


    by Robert Hughes

    Sales of existing homes decreased 7.2 percent in February, to a 6.02 million seasonally adjusted annual rate. Sales are down 2.4 percent from a year ago.

    Sales in the market for existing single-family homes, which account for about 89 percent of total existing-home sales, dropped 7.0 percent in February, coming in at a 5.35 million seasonally adjusted annual rate (see first chart). From a year ago, sales are down 2.2 percent.

    Condo and co-op sales fell 9.5 percent for the month, leaving sales at a 670,000 annual rate for the month versus 740,000 in January (see first chart). From a year ago, condo and co-op sales were off 4.3 percent.

    The dominant single-family segment saw sales decline in all four regions. Sales fell 12.1 percent in the Midwest, 10.9 percent in the Northeast, the smallest region by volume, 4.5 percent in the West, and 4.2 percent in the South, the largest region by volume. Sales are also down in three of the four regions measured from a year ago (-13.6 percent in the Northeast, -8.5 percent in the West, and -2.4 percent in the Midwest, but up 4.2 percent in the South).

    Condo and co-op sales were down in three regions in February, -14.3 percent in the Northeast, -11.4 percent in the South, and -6.7 percent in the West, but were unchanged in the Midwest.  From a year ago, sales are off in three regions but up 11.1 percent in the Midwest.

    Total inventory of existing homes for sale rose in February, increasing by 2.4 percent to 870,000, leaving the months’ supply (inventory times 12 divided by the annual selling rate) up 0.1 month at 1.7.

    For the single-family segment, inventory was up 2.7 percent for the month at 760,000 (see second chart) but is 12.6 percent below the February 2021 level. The months’ supply was 1.7, up from 1.5 in the prior month (see third chart).

    The condo and co-op inventory increased 4.6 percent to 113,000 (see second chart), pushing the months’ supply up to 2.0 from 1.8 in January.  Months’ supply is 25.9 percent below February 2021 (see third chart).

    The median sale price in February of an existing home was $357,300, 15.0 percent above the year ago price. For single-family existing home sales in February, the price was $363,800, a 15.5 percent rise over the past year (see fourth and fifth charts). The median price for a condo/co-op was $305,400, 10.9 percent above February 2021 (see the fourth and fifth charts).

    Housing is likely to be volatile over the coming months as fundamentals adjust to changing market conditions. Increased opportunities for employees to work remotely are likely to impact demand while supply chain issues and labor difficulties impact supply. Furthermore, elevated prices and the recent jump in mortgage rates may push some buyers out of the market.

    Bob Hughes

    Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals.

    Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.




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