Home Sales Drop Amid Inventory, Affordability Issues
March 22, 2017
Existing-home sales dropped in February as tight inventory and weakening affordability conditions kept many buyers out of the market in most parts of the country, the National Association of REALTORS® reports. Total sales for existing single-family homes, townhomes, condos, and co-ops fell 3.7 percent to a seasonally adjusted annual rate of 5.48 million, compared to 5.69 million in January, according to the report. However, the pace of sales in February remained 5.4 percent above a year ago.
Sales By Region
A regional breakdown of how existing-home sales fared across the country in February:
- Northeast: fell 13.8 percent to an annual rate of 690,000. That's still 1.5 percent above a year ago. Median price: $250,200, which is 4.1 percent above year-ago levels.
- Midwest: dropped 7 percent to an annual rate of 1.20 million. That's still 2.6 percent above a year ago. Median price: $171,700, up 6.1 percent from a year ago.
- South: increased 1.3 percent to an annual rate of 2.34 million. That's 5.9 percent above February 2016. Median price: $205,300, up 9.6 percent from a year ago.
- West: decreased 3.1 percent to an annual rate of 1.25 million. That's 9.6 percent above a year ago. Median price: $339,900, up 9.6 percent from a year ago.
"REALTORS® are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that's pushing up price growth and pressuring the budgets of prospective buyers," says NAR chief economist Lawrence Yun. "Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market."
Here are some key indicators of the housing market in February from NAR's latest report.
Home prices: The median existing-home price for all housing types was $228,400—up 7.7 percent from a year ago ($212,100).
Inventories: Total housing inventory rose 4.2 percent to 1.75 million existing homes available for sale, but that's still 6.4 percent lower than a year ago (1.87 million). Unsold inventory is at a 3.8-month supply at the current sales pace. Inventories have dropped year over year for 21 consecutive months.
Distressed sales: Foreclosures and short sales accounted for 7 percent of sales for the third consecutive month and are down from 10 percent a year ago. Six percent of sales were foreclosures, and 1 percent were short sales. Foreclosures were discounted an average 18 percent below market value, while short sales were discounted 17 percent.
Days on the market: Forty-two percent of homes sold in February were on the market for less than a month. On average, properties stayed on the market for 45 days, down considerably from a 59-day average a year ago. Short sales were on the market the longest, at a median of 214 days in February; foreclosures sold in 49 days on average; and non-distressed homes took an average of 45 days.
All-cash sales: All-cash transactions accounted for 27 percent of sales. That's an increase from 25 percent a year ago and is the highest level since November 2015. Individual investors, who account for the bulk of cash sales, purchased 17 percent of homes, down from 18 percent a year ago.
"The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future," Yun says. "Investors are still making up an above-average share of the market right now, despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg up on the competition against first-time buyers."
Updated: August 16, 2018