Sales of previously owned U.S. homes rebounded in February to the fastest pace in almost a year, topping estimates and snapping a three-month streak of declines to offer a robust indication that the housing market is stabilizing after last year's slump.
Contract closings increased 11.8 percent, the most since 2015, the National Association of Realtors said on Friday. Houses sold at a seasonally adjusted annual rate of 5.51 million last month, a sharp rebound from a pace of 4.94 million in January.
The median sales price climbed 3.6 percent in February from a year earlier, and the figures point toward growth in sales of homes priced between $250,000 and $500,000. The median sales price in January was $247,500, a slight increase of 3.6 percent from last year. Home-price growth has been converging with average hourly wage gains in recent months.
The surprisingly strong gain, which was driven entirely by single-family homes, indicates that the lowest mortgage rates in a year, resilient consumer sentiment, and the Federal Reserve's pledges to remain patient on interest-rate increases are helping to stabilize housing markets after sales tumbled in 2018.
Single-family home sales jumped 13.3 percent to a 4.94 million pace amid strong gains in the South and West. The pace of condo sales was unchanged at 570,000.
Analysts said it may take some time to determine whether the rebound is sustainable or mainly reflected a boost on pent-up demand from buyers who were waiting for more attractive mortgage rates. Low supplies could act as a constraint on sales, and purchases were still down 1.8 percent from a year ago because of the severity of last year's slowdown.
But 30-year mortgage rates have tumbled after peaking in early November at roughly 5 percent, helping sales to recover as that average has fallen to 4.28 percent this week, according to mortgage buyer Freddie Mac -- the Federal Home Loan Mortgage Corp.
Mortgage rates are expected to fall further. The Fed indicated this week that it foresees no further interest-rate increases this year -- a message that has sent the yield on the 10-year Treasury note plunging. Rates on long-term mortgages closely track the 10-year yield.
Other recent reports have shown new-home construction rebounded in January while sales of new single-family houses cooled. Home-price gains have also been generally decelerating since early 2018.
"Without a doubt, the lower interest rates have reignited home-buying interest," Realtors association chief economist Lawrence Yun said at a briefing in Washington, citing stronger readings in the University of Michigan and Conference Board consumer sentiment surveys. "This was a very strong pace for home sales."
Home purchases advanced in three of four regions, led by a 16 percent gain in the West. The Northeast was unchanged.
At the current pace, it would take 3.5 months to sell all the homes on the market, compared with 3.9 months in January; Realtors see anything below five months of supply as a sign of a tight market.
First-time buyers accounted for 32 percent of sales, up from 29 percent the prior month.
Existing-home sales account for about 90 percent of U.S. housing and are calculated when a contract closes. New-home sales make up the remaining 10 percent and are counted when contracts are signed.
Information for this article was contributed by Josh Boak of The Associated Press; and by Carlyann Edwards, Jordan Yadoo and Sophie Caronello of Bloomberg News.
Business on 03/23/2019