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First Cut: Sales of existing homes boom in February before a likely pause in March

Sales of existing homes gained 6.5% in February to 5.77 million units (SAAR), and were up 7.2% compared to the year ago month. The NAR report noted that the pace was the strongest since February 2007 and that the NAR anticipated that buyer traffic would fall off with social distancing amid efforts to stem the spread of the coronavirus. However, “incredibly low mortgage rates” are bringing out first-time buyers and tapping into pent up demand, at least through February.

Sales of single-family units were up 7.3% month-over-month to 5.170 million units and were also up 7.3% compared to February 2019. Sales of multi-family units were flat at 600,000 in February from January, but up 7.1% compared to the same month last year.

Due to robust sales, the supply of homes available for sale was 3.1 months’ worth, the same as in January and scarcely different from the low of 3.0 months in December. The median price of an existing home was up 1.5% to $270,100 in February and up 8.0% from February 2019.

Should sales dip in March as expected, it will be from an elevated level and should not presage a collapse in the housing market during the pandemic.

Among regions, only the Northeast had a decline at down 4.1% in February. This was a dip from near-term peaks of 730,000 in December and January and was still a strong performance. Mild weather and low rates may have borrowed some sales going into the spring months. Sales were up 18.9% in the West, 7.2% in the South, and 0.8% in the Midwest. In particular, the sharp rise in sales in the West was probably a response to low interest rates and the chance to buy a home in an expensive market will the rate improved affordability.

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