February existing home sales rose less than expected as a shortage of properties on the market pushed prices up, suggesting a new weight on the housing market. The National Association of Realtors said on Monday that existing home sales rose by just 1.2 percent to an annual rate of 4.88 million units.
“Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” Lawrence Yun, NAR chief economist said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”
January’s sales pace was unrevised at 4.82 million units, but the NAR argued sales were also constrained by a harsh winter weather. However, though sales in the Northeast cratered by 6.5 percent last month, sales in the Midwest (clearly affected by weather) were unchanged.
“Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country,” Yun added. “With all indications pointing to a rate increase from the Federal Reserve this year – perhaps as early as this summer – affordability concerns could heighten as home prices and rents both continue to exceed wages.”
Sales rose 1.9 percent in the South and increased 5.7 percent in the West. Economists had forecast home resales, which are measured at the closing of contracts, rising to a 4.90 million-unit pace last month.
“Investor sales are trending downward due to the continued rise in prices and fewer bargains available from distressed properties coming onto the market,” says NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “Furthermore, Realtors in areas popular to foreign buyers, such as South Florida and the West Coast, are reporting tempered demand from international clients – who typically pay in cash – due to the strengthening U.S. dollar compared to foreign currencies.”