For the second straight year, outstanding home sales decreased in February as buyers continued to face the same dilemma with low inventory levels.
The outstanding home sales index fell 10.6% from January through January to 110.3% in February, according to the National Association of Realtors. Contract signings were down 0.5% year-on-year. An index of 100 corresponds to the level of contract activity in 2001.
“Demand to buy a home is widespread, there are multiple offers, and time to market is fast, but contracts are not clicking because of low inventory levels,” said Lawrence Yun, chief economist at NAR. “Only the upper market is more active due to the adequate supply. Interestingly enough, demand doesn’t seem to have been affected by the recent humility just yet rises in mortgage rates. ”
Yun expects interest rates to be no more than 3.5% this year. He said that both potential buyers and current homeowners seeking refinancing can continue to benefit from the relatively low interest rates.
“Potential buyers may need to expand their geographic search areas in today’s tight market,” said Yun. “If there were a larger inventory of inventory to choose from – ideally five or six months of delivery – more buyers could buy properties at an affordable price.”
Each of the four major US regions saw month-on-month decline in February, while results across the four regions were mixed year over year.
Home sales in northeastern PHSI declined 9.2% to 92.3 in February, down 3.9% year over year. The Midwest was down 9.5% to 102.4, a 6.1% year-over-year decrease.
In the south, sales fell by 13% compared to the previous month and rose by 2.9% year-on-year to 133.2 in February. The index in the west fell 7.4% month on month and rose 1.9% year over year to 96.9.