February home sales see small rebound, but supply growth is ‘sluggish’
Home sales rose slightly to start the year, but high mortgage rates may now throw the spring season into cold waters.
Existing home sales in February rose 1.7% from January to a seasonally adjusted annual rate of 4.09 million units, according to the National Association of Realtors. Sales fell 1.4% compared to February last year.
This number represents closed sales, so deals were likely signed in December and January. Mortgage interest rates dropped slightly and remained solidly in the low range around 6% of the 30-year fixed mortgage. Rates were about one point higher the previous year.
“Despite the modest increase in home sales, real housing demand remains muted relative to wage growth and job gains,” Lawrence Yun, chief economist for realtors, said in a statement. he said. “Wage growth now outpaces house price growth by almost four percentage points. Mortgage rates are also measurably lower than they were a year ago.”
Yun also noted that there are now more than 6 million jobs compared to 2019, but annual home sales are down 1 million.
Low mortgage rates have helped improve affordability slightly, but low inventory is still a significant negative. At the end of February, there were 1.29 million units sold, up 2.4% from January and 4.9% from February 2025. At the current sales pace, this represents a 3.8-month supply, unchanged from January. The six-month supply is considered a balanced market between buyers and sellers.
More sellers who delisted their homes last fall amid slowing sales and weak consumer confidence are now putting their homes back on the market, according to real estate brokerage firm Redfin. Approximately 45,000 homes that were removed from the list last year were put back on the market in January. This is the highest January figure since Redfin began tracking this metric a decade ago and represents a record 3.6% of homes on the market in January.
“The inventory is increasing, but slowly,” Yun said. “If demand increases significantly in the coming months and outpaces supply growth, house prices will inevitably rise. Increasing supply is therefore crucial to limiting the rise in house prices, increasing housing affordability and increasing transactions.”
However, limited supply keeps prices slightly higher. The median price of a home sold in February was $398,000, up 0.3% year over year. Sales continue to be strongest in the highest price category, properties listed at $1 million or more. Sales fell sharply at the bottom end of the market.
It’s taking longer to sell a home, up to 47 days compared to 42 days a year ago. First-time shoppers represented 34% of total sales; This rate was 31% compared to the previous year. Investors accounted for 16% of sales, unchanged from a year ago.
