Existing home sales fall in February

[mahatmakanejeeves]

Yahoo Finance

Existing home sales fall in February

Amanda Fung · Editor
Fri, March 18, 2022, 10:00 AM · 4 min read

Homebuying activity faded in February. ... Existing home sales declined 7.2% to a seasonally adjusted 6.02 million units in February from a month earlier, according to the National Association of Realtors (NAR). The number of sales was down 2.4% from the same month a year ago. January home sales figures were revised slightly down to 6.49 million from 6.5 million. The results came in much higher than analysts' expectations of a 6.2% month-over-month decline to 6.1 million units, according to Bloomberg consensus estimates.

“The latest decline is of larger magnitude than normal,” said Lawrence Yun, chief economist at NAR, noting that anything above 5% is considered a big swing.

Sales in all four regions of the U.S. fell, with the Northeast and Midwest leading the declines by recording a 11.5% and 11.3% drop, respectively. Sales fell 5.1% in the South and 4.7% in the West.

The dip in actual home sales should not have come as a surprise given the decline in pending home sales in the first month of this year and two months prior. Pending home sales, a leading indicator of the housing market, indicates when buyers first sign contracts. So the actual sale of a home usually takes place at least a month later.

{snip}

[progree]

1. The combination of higher mortgage rate and higher home prices: 35.6% higher P&I payment

than a year ago.

This is something that I posted last night in this thread:
https://www.democraticunderground.com/10142889877

==========================================

Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan this week jumped to 4.16% from 3.85% last week. That’s a sharp contrast from last year’s record-low mortgage rates of under 3%. A year ago, the 30-year rate stood at 3.09%.

A year ago, it says the average mortgage rate was 3.09%. On a $300,000 home, that's a $1,279/month principal and interest (P&I) payment for a 30 year fixed loan.

Now at 4.16% -- that's a $1,460/month payment.

That's 14.2% increase. A $2,172/year increase.

And that's not all. According to the latest Case-Shiller national home prices report, the average home price increased by 18.8% in the past year.

So on average that $300,000 home became a $356,400 home.

The P&I on a $356,400 home at 4.16% interest is $1,735/month

So in one year, thanks to the combination of higher mortgage rates and higher house prices, we have a 35.6% increase in the P&I payment.

The boost in prices helps the home seller of course (leaving aside that the home seller has to find another place to live, also at an inflated price compared to a year ago, so its not all joy and gravy).

The boost in the mortgage rate helps neither buyer nor seller, just the bank.

[Laura PourMeADrink]

2. #s make sense but the supply is very low. So there is

definitely another factor in play. World so uncertain with Covid - people aren't selling - because they don't want to move?. Perhaps uproot their kids who were in the middle of part time school part time home school? Just plain scared and feel safest where they're at?

[peppertree]

3. That - and the fact that existing home sales had risen so much over the past decade

Some plateauing in volume (an ultimately, prices) was to be expected. To slip to an annualized rate of 6 million (i.e. 500,000 homes sold in February) isn't bad at all by historical standards.

https://tradingeconomics.com/united-states/existing-home-sales (click on max)

Now, if it falls to 5 million (annualized) or less - that's trouble.

[Laura PourMeADrink]

4. Perhaps. Our hometown agent in CT told me that

They had inventory of about 200 homes before early 2021. Currently there are now 29 homes for sale.