February Marks a Turnaround for Existing Home Sales

Are Americans at home with the housing market? 

Sales of previously-owned homes in the US hit a surprising height in February. Sick of waiting for the Federal Reserve to make a move, buyers and sellers seem to be accepting the market for what it is, high mortgage rates and all.

Neither Buyer’s nor Seller’s Market

It’s no secret that America’s housing market has been in a slump. Because the Fed has raised interest rates nearly a dozen times since 2022 to fight inflation, borrowing money for a home purchase has gotten more expensive with 30-year mortgages — the most popular kind — sitting at around 6.9% these days, according to Freddie Mac. Still, there’s been a drop since October when they reached 7.8%.

Owners didn’t want to part with the low mortgage rates they were already locked into. That led to a housing shortage, and what was left on the market proved too expensive for many buyers. The Fed is expected to lower interest rates later this year, but for plenty of buyers and sellers, the waiting game has gone on long enough:

• In February, contracts closed on roughly 4.4 million existing homes, an increase of 9.5% from the month prior, according to the National Association of Realtors.
• The median existing-home sales price elevated to $384,500, the eighth consecutive month of year-over-year price gains. However, the sales prices across all US homes jumped only 0.6% from January to February, which resembles pre-pandemic trends, according to Redfin.

“Buyers realize that they can always refinance later and the perfect home can be hard to come by,” Jessica Levine, a top 10 broker at Douglas Elliman, told The Daily Upside. “Prices have also stabilized, so waiting is no longer in a buyer’s best interest.”

White Picket Fences: Buying a home has been a hallmark of the American Dream, but it feels out of reach to many. This week, President Joe Biden proposed new policies that would have the federal government take a more direct role in America’s local housing markets in order to reduce costs and lessen zoning laws. Land-use at the community level is not really something Washington can dictate, but the idea is that federal dollars can incentivize state and local governments to reform zoning rules to expand affordable housing.