United States existing home sales unexpectedly rose in February as mortgage rates continued to drop, though prices could soon increase if demand begins outpacing slow inventory growth.
Sales were up 1.7% in February to a seasonally adjusted annual rate of 4.09 million units, according to the National Association of Realtors (NAR). This is above Reuters-polled economists’ forecast of 3.89 million units, but a 1.4% decrease year-over-year.
“Housing affordability is improving, and consumers are responding,” said NAR chief economist Dr Lawrence Yun. “Still, there is a long way to go to return to pre-pandemic levels of transaction activity. There are more than 6 million more jobs than in 2019, yet home sales per year are down by one million.”
“Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” Yun said. “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.”
NAR’s affordability index rose, reaching 117.6 in February. This is the highest reading since March 2022, surpassing the 117.1 seen in January and February 2025’s 103.1.
Mortgage rates continued to slide last month. The average 30-year fixed mortgage rate was 6.05%, falling from 6.10% in January and 6.84% year-over-year.
Inventory was 1.29 million units, increasing 2.4% from January and 4.9% year-over-year. The 3.8-month supply of unsold inventory was unchanged from January.
“Inventory is growing, but sluggishly,” said Yun. “If demand picks up notably in the coming months and outpaces supply growth, home prices will inevitably rise.”
The median sales price was US$398,000, rising 0.3% year-over-year in the 32nd consecutive month of price increases.
Single-family homes posted a 2.5% monthly sales increase to 3.73 million units. Condominium and co-op sales dropped 5.3% to 360,000.
The Northeast was the only region to see a decline in sales. The West reported the largest increase, rising 8.2%, as the median price in these states fell 1.9%.
