By Manuel Gutierrez, Consulting Economist to NKBA

Sales of existing home sales fell 7.2 percent in February to an annual rate of 6.02 million units, more than canceling January’s 6.6 percent gain. February posted the slowest sales pace in six months, and was 100,000 houses below last year’s total.

The pace of price increases eased somewhat, with average (mean) prices rising 8.4 percent to $371,000 from year-ago levels. But the median price of $357,000 is up a more robust 15% from February 2021. Average prices historically are at least 20 percent higher than median prices, but that gap has shrunk to less than 10 percent. This means that fewer high-priced homes are selling today, with the trend toward mid-priced houses.

Sales fell in all four U.S. regions: They were down 11.5 percent in the Northeast, 11.3 percent in the Midwest, 5.1 percent in the South and 4.7 percent in the West. Maintaining their usual pattern, the South saw the most sales, generating 46 percent of the national total for an annual rate of 2.79 million units. The West and Midwest each contributed about 20 percent of overall home sales, and the Northeast generated about 11 percent.

Year-over-year, prices are up slightly over 10 percent in each region. In the West, a 10 percent annualized gain brought the average price to $506,000. In the Northeast, prices rose 11 percent to an average of $388,000. The average in both the South and Midwest increased 13 percent, with the lowest numbers in the Midwest, where the typical home sells for $279,000 — about $100,000 below the national average.

Even though the inventory of homes on the market rose slightly in February, there were still only 870,000 homes for sale. At the current pace, inventory is just enough to sustain 1.7 months of sales.