February home sales see slight rebound, but supply growth ‘slow’

Home sales made slight gains at the start of the year, but rising mortgage rates now could throw cold water on the spring season.

Existing home sales in February rose 1.7% from January to a seasonally adjusted annual rate of 4.09 million units, according to the National Association of Realtors. Sales decreased by 1.4% compared to February of last year.

This number represents closed sales, so deals were likely signed in December and January, when mortgage rates fell slightly and remained steady in the low range near 6% on a 30-year fixed mortgage. Rates were about a full percentage point higher the previous year.

“Despite modest gains in home sales, actual housing demand remains weak compared to wage growth and job gains,” Lawrence Yun, chief economist at the brokerage, said in a statement. “Wage growth now outpaces home price growth by about four percentage points. Mortgage rates are also significantly lower than a year ago.”

Yoon also noted that there are more than 6 million more jobs now than in 2019, yet home sales are down annually by 1 million jobs.

Lower mortgage rates have helped improve affordability slightly, but low inventory remains a major drag. There were 1.29 million units on sale at the end of February, an increase of 2.4% from January and 4.9% from February 2025. At the current sales pace, this represents a 3.8-month supply, unchanged from January. A six-month supply is considered a balanced market between buyer and seller.

More sellers who listed their homes last fall, due to sluggish sales and weak consumer confidence, are now relisting their homes, according to real estate brokerage Redfin. Nearly 45,000 homes that were written off last year were put back up for sale in January. That’s the highest number for January since Redfin began tracking this metric a decade ago and represents a record 3.6% of homes that were on the market in January.

“Inventory is growing, but slowly,” Yoon said. “If demand rises significantly in the coming months and outpaces supply growth, housing prices will inevitably rise. That is why increasing supply is so important to help limit housing price growth, improve housing affordability, and boost transactions.”

However, tight supply keeps prices barely high. The median price of a home sold in February was $398,000, an increase of 0.3% year over year. Sales continue to be strongest in the higher price bracket, i.e. properties listed at $1 million or more. Sales fell sharply at the lowest level in the market.

It still takes longer to sell a home, at 47 days, compared to 42 days one year ago. First-time buyers account for 34% of total sales, up from 31% a year ago. Investors accounted for 16% of sales, unchanged from last year.