Low inventory and rising prices stymied existing-home sales in February after starting the year at the fastest pace in nearly a decade.
Sales of previously owned homes, which are completed transactions including single-family homes and townhomes, fell 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January, the National Association of Realtors said Wednesday.
Despite the decline, February’s sales were 5.4 percent above a year ago.
{mosads}“Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” said Lawrence Yun, NAR chief economist.
“Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market,” Yun said.
Housing inventory last month increased 4.2 percent to 1.75 million but that is still 6.4 percent lower than a year ago.
Supply levels have fallen for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace, up only slightly from 3.5 months in January.
Along with low inventory, rising prices are cutting into any chance for accelerated sales despite more interest from potential buyers.
The median existing-home price in February was $228,400, up 7.7 percent from the same month a year ago.
Last month’s price increase was the fastest since last January and is the 60th consecutive month of year-over-year gains.
Cash sales represented 27 percent of transactions in February, which matches the highest level since November 2015, up from 23 percent in January and 25 percent a year ago.
Investors, who account for many cash sales, purchased 17 percent of homes in February, up from 15 percent in January. Overall, 71 percent of investors paid cash in February, which matches the highest level since April 2015.
“The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” Yun said.
First-time buyers were 32 percent of sales in February, which is down from 33 percent in January but up from 30 percent a year ago.
“Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers,” Yun said.
Distressed sales — foreclosures and short sales — were 7 percent of sales for the third straight month in February, and are down from 10 percent a year ago.
Sales of single-family homes fell 3 percent to a seasonally adjusted annual rate of 4.89 million in February from 5.04 million in January, and are now 5.8 percent above the 4.62 million pace a year ago.
Existing condominium sales dropped 9.2 percent to a seasonally adjusted annual rate of 590,000 units in February, but are still 1.7 percent higher than a year ago.
Regionally, sales fell in three of four regions.
Sales in the Northeast fell by 13.8 percent, by 7 percent in the Midwest and by 3.1 percent in the West.
The South saw a 1.3 percent increase last month.