February home sales see small rebound, but supply growth is 'sluggish'

• Housing inventory increased modestly to 1.29 million units (up 4.9% year-over-year), but supply growth is 'sluggish' compared to a 6-month supply needed for market balance
• Wage growth is now outpacing home price growth by almost 4 percentage points, and there are 6 million more jobs than in 2019, yet annual home sales are down by 1 million units
• Sales were strongest in the $1 million-plus category while lower-priced homes saw sharp declines; first-time buyers represented 34% of sales, up from 31% a year ago

February Home Sales Summary

Key Sales Data:

• Existing home sales rose 1.7% month-over-month to a seasonally adjusted annual rate of 4.09 million units in February
• Sales declined 1.4% year-over-year compared to February 2025
• Median home price: $398,000, up just 0.3% year-over-year
• Average time on market increased to 47 days, from 42 days a year ago

Inventory Challenges:

• Available homes: 1.29 million units, up 2.4% from January and 4.9% year-over-year
• Current supply represents 3.8 months at the present sales pace (unchanged from January)
• Market remains well below the 6-month supply benchmark for balanced conditions
• Nearly 45,000 previously delisted homes returned to market in January—the highest January figure in a decade, representing 3.6% of available inventory

Market Dynamics:

• Sales closed in February reflected contracts signed in December-January when mortgage rates held near 6% on 30-year fixed loans
• Luxury segment ($1 million+) showed strongest performance, while lower-priced homes experienced sharp declines
• First-time buyers comprised 34% of sales, up from 31% a year ago
• Investor share remained flat at 16%

Market Implications:

NAR Chief Economist Lawrence Yun noted housing demand remains "muted" despite wage growth outpacing home price increases by four percentage points and mortgage rates being lower year-over-year. With 6 million more jobs than 2019 but 1 million fewer annual home sales, the market faces structural challenges. Rising mortgage rates could dampen the spring selling season, while sluggish inventory growth raises concerns that increased demand could drive prices higher and worsen affordability.