Home prices are finally declining, ending longest streak in growth. Who are the homebuyers?
For the first time in 131 months, home prices fell year-over-year, ending the longest price growth streak on record and presenting an opportunity for buyers grappling with the double whammy of high mortgage rates and elevated prices.
The median existing-home price for all housing types declined 0.2% to $363,000, from February 2022 ($363,700), according to data released Tuesday by the National Association of Realtors.
In an indication that buyers have begun returning to the market as mortgage rates declined slightly earlier in the year, existing-home sales reversed a 12-month slide in February, registering the largest monthly percentage increase since July 2020, according to the National Association of Realtors.
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Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – jumped 14.5% from January to 4.58 million in February.
Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines, said National Association of Realtors Chief Economist Lawrence Yun.
"The monthly increase of this magnitude is a rare event. The mortgage rates change and so the consumer is just constantly watching the market," he said.
“Moreover, we’re seeing stronger sales gains in areas where home prices are decreasing and the local economies are adding jobs.”
According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.60% as of March 16. That’s down from 6.73% from the previous week but up from 4.16% one year ago.
Is housing inventory going up?
Total housing inventory registered at the end of February was 980,000 units, identical to January and up 15.3% from one year ago (850,000). Unsold inventory sits at a 2.6-month supply at the current sales pace, down 10.3% from January but up from 1.7 months in February 2022.
“Inventory levels are still at historic lows,” Yun said.
While multiple offers are returning on a good number of properties, they tend to be on homes in the lower price range, said Yun.
Properties typically remained on the market for 34 days in February, up from 33 days in January and 18 days in February 2022. Fifty-seven percent of homes sold in February were on the market for less than a month.
Who were the home buyers in February?
First-time buyers were responsible for 27% of sales in February, down from 31% in January and 29% in February 2022.
All-cash sales accounted for 28% of transactions in February, down from 29% in January but up from 25% in February 2022.
Individual investors or second-home buyers, who make up many cash sales, purchased 18% of homes in February, up from 16% in January but down from 19% in February 2022.
Distressed sales – foreclosures and short sales – represented 2% of sales in February, nearly identical to last month and one year ago.
What was the regional breakdown of home sales?
Existing-home sales in the Northeast improved 4% from January to an annual rate of 520,000 in February, down 26% from February 2022. The median price in the Northeast was $366,100, down 4.5% from the previous year.
In the Midwest, existing-home sales grew 13.5% from the previous month to an annual rate of 1.09 million in February, declining 18.7% from one year ago. The median price in the Midwest was $261,200, up 5.0% from February 2022.
Existing-home sales in the South rose 16% in February from January to an annual rate of 2.11 million, a 21% decrease from the prior year. The median price in the South was $342,000, an increase of 3% from one year ago.
In the West, existing-home sales rose 19% in February from the prior month, down 28.3% from the previous year. The median price in the West was $541,100, down 5.6% from February 2022.
Swapna Venugopal Ramaswamy is a housing and economy correspondent for USA TODAY. You can follow her on Twitter @SwapnaVenugopal and sign up for our Daily Money newsletter here.
This article originally appeared on USA TODAY: Home prices are sliding and homes sales are up. Here's what to know.