Steel Markets

Existing Home Sales Slip Due to Low Inventory

March 23, 2021

Buyers continued to snap up existing homes in February causing a record low inventory of 1.03 million units, according to data from the National Association of Realtors. Sales for all types of existing housing fell 6.6% from January to a seasonally adjusted annual rate of 6.22 million, but were 9.1% higher than a year ago. Single-family home sales slipped 6.6% from January, while condo and co-op sales slid 6.7%.

“Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels,” said Lawrence Yun, NAR’s chief economist.

Yun noted that higher prices and rising mortgage rates may slow growth in the near term. The overall median sales price for an existing home jumped 15.8% year-over-year to $313,000. The price for a single-family home rose 16.2 percent year-over-year to $317,100, while the median condo price jumped 12.3 percent to $280,500.

“I still expect this year’s sales to be ahead of last year’s, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy,” said Yun. “Many Americans have been saving money and there’s a strong possibility that once the country fully reopens those reserves will be unleashed on the economy.”

Inventory of 1.03 million at the end of February was 29.5% lower than a year ago, representing a two-month supply at the current sales pace. Most homes (74%) sold in less than a month with the typical time on the market just 20 days in February.

Prices rose in all four regions, while sales declined in three. Sales in the Northeast fell 11.5%, Midwest 14.4% and South 6.1%, but rose 4.6% in the West. Median prices rose by double digits across the board with the Northeast at $356,000, Midwest at $231,800, South at $271,200 and the West at $493,300.