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According to NAR Chief Economist Lawrence Yun, home prices will not collapse, but this is not the bottom yet, meaning there might be a further decrease. The number of units sold could be even higher, but there is still a very low supply.
According to the data from the National Association of Realtors, the sales of previously owned homes in the US surged in February, with the increase totaling 14.5%. Since July 2020, it has been the largest monthly percentage growth. The increase has brought the total sales at an annualized rate of 4.58 million units. Notably, all four US regions have seen a spike in existing-home sales in February, while year-over-year sales saw a decline across the country. Year-over-year, sales fell by 22.6%, down from 5.92 million in February 2022.
The existing-home sales data published by the National Association of Realtors measure sales and prices of existing single-family homes for the nation overall and give breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.
So why has there been such a surge in February? Experts explain it by lower mortgage rates. For example, the benchmark fixed rate on 30-year mortgages now is at 6.3%, down from last month’s levels, while the average 15-year fixed mortgage APR is 6.22%. The average price of an existing home sold in February was $363,000, a 0.2% decline from February 2022.
The National Association of Realtors Chief Economist Lawrence Yun commented:
“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines. Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
He further added that “inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”
According to Lawrence Yun, home prices will not collapse, but this is not the bottom yet, meaning there might be a further decrease. The number of units sold could be even higher, but there is still a very low supply. There were just 980,000 homes for sale at the end of February, and at the current sales pace, that represents a 2.6-month supply.
Notably, mortgage rates fluctuated greatly in 2022. The average 30-year fixed rate went as low as 3.22% on January 6, 2022, and reached a high of 7.08% on November 10, 2022. These fluctuations can be attributed largely to the Federal Reserve’s aggressive actions to help combat decades-high inflation. However, with the banking crisis, mortgage rates have been sent down. Mortgage bankers anticipate further rate declines, at least in the short term. It all depends on moves by the Federal Reserve.
Diana Galavis, Northeast Florida Association of Realtors President, stated:
“So, interest rates have eased up just a bit. That means buyers have more buying power and are possibly able to afford a home here in Northeast Florida. Right now you are able to shop. It’s one of the beauties of being able to be in the market right now. So, I would say have a trusted professional, a realtor, help guide you through the process and shop different lenders and different rates.”
When it comes to deciding whether or not it is the right time to buy a house now, you should consider whether you will stay in the home for at least five years. If yes, then the current lower mortgage rate is a good opportunity to catch.
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