Sales of existing homes in the United States fell more sharply than expected in February as rising prices and low supply cooled off the market after a strong start to the year.
The National Association of Realtors reported Monday that sales dropped 7.1% from January to an annual rate of 5.08 million. Economists surveyed by The Wall Street Journal had expected sales would fall 2.6% to 5.33 million.
In January, sales reached their highest level in six months. February’s drop was particularly dramatic in regions of the country that experienced harsh winter weather, with sales plunging 17.1% in the Northeast and 13.8% in the Midwest.
“The lull in contract signings in January from the large East Coast blizzard, along with the slump in the stock market, may have played a role in February’s lack of closings,” Lawrence Yun, NAR’s chief economist, said in a news release “However, the main issue continues to be a supply and affordability problem. Finding the right property at an affordable price is burdening many potential buyers.”
The 5.25 million average for January and February was comparable to the same period a year ago and February’s sales were still 2.2% higher than February 2015. Inventory rose slightly in February to 4.4 months’ supply from January’s 4.0.
But economist Joel Naroff of Naroff Economic Advisors told The Wall Street Journal that a more “normal, vibrant market” would have roughly six months’ supply.
The median existing-home price for all housing types in February was $210,800, up 4.4% from a year ago. Prices have now risen for 48 consecutive months.