(March 20): Sales of previously owned homes in the US unexpectedly bounced back in February, spurred by a greater supply of houses and improved weather heading into the crucial spring period.
 
Contract closings increased 4.2% to an annualised rate of 4.26 million in February, according to National Association of Realtors (NAR) figures released on Thursday. The figure exceeded all estimates in a Bloomberg survey of economists.

Sales climbed the most in the West and South, which were afflicted at the start of the year by destructive wildfires in Los Angeles and severe winter storms, respectively. To the extent January sales were affected by weather, NAR chief economist Lawrence Yun said last month that those transactions would be carried into February.

The supply of previously owned homes jumped 17% from a year ago to 1.24 million, the most for any February since 2020. Even so, the median sales price increased 3.8% from a year ago to US$398,400 (RM1.77 million) — a record for the month — extending a run of year-over-year price gains dating back to mid-2023.

“Home buyers are slowly entering the market,” Yun said in a statement. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”

The housing market entered 2025 with some momentum as home buyers and sellers have come to terms to elevated mortgage rates, freeing up inventory that has made a slight dent in prices. However, home prices are still high and housing remains unaffordable for many Americans.

The contract rate on a 30-year fixed mortgage steadily declined from mid-January to early March, which spurred greater demand for home purchases, according to the Mortgage Bankers Association. However, the recent rate drop likely didn’t influence February sales, since existing homes typically go under contract a month or two before closing.

High mortgage rates discouraged many homeowners from listing their houses for sale the last couple years, because they didn’t want to give up their low rates to look for a new home with a higher one. But that so-called “lock-in effect” has been dissipating recently as people grow more accustomed to high financing costs.

Existing-home sales account for the majority of the US total and are calculated when a contract closes. The government will release figures on new-home sales on Tuesday.

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