Existing home sales in the US rose by 4.2% from the previous month to a seasonally adjusted annualized rate of 4.26 million homes in February 2025, rebounding from the downwardly revised 4.7% drop in the previous month and firmly surpassing market expectations of a decline to 3.95 million. The stronger-than-expected sales highlight resilience in the housing market despite affordability challenges.
US existing home sales unexpectedly rise
"Home buyers are slowly entering the market," said NAR Chief Economist Lawrence Yun. "Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand." The increase in supply has provided some relief to buyers, who have been grappling with elevated borrowing costs and rising home prices.
The median price for existing home sales climbed to $398,400, marking a 3.8% increase from the previous year. This steady rise in prices reflects continued demand, particularly in regions where inventory remains tight. Meanwhile, the inventory of unsold homes rose by 5.1% from the prior month to 1.24 million units, translating to 3.5 months of supply at the current sales pace. While this represents an improvement in housing availability, it still falls short of the 5-6 months of supply typically considered indicative of a balanced market.
Housing market dynamics will depend on mortgage rate trends
Looking ahead, housing market dynamics will depend heavily on mortgage rate trends, wage growth, and broader economic conditions. If mortgage rates remain stable or decline, it could encourage further buyer activity. Additionally, with the spring homebuying season approaching, sellers may feel more confident listing their properties, further boosting inventory levels and market fluidity. However, lingering affordability concerns and economic uncertainties may continue to weigh on some potential buyers, keeping the housing recovery gradual.
