Home Sales Tick Up in February, But Rising Mortgage Rates Pose Threat

Existing home sales experienced a modest increase in February, offering a glimmer of hope for the housing market. However, recent volatility in mortgage rates casts a shadow over the potential for sustained recovery as the spring buying season approaches.

February Sales Demonstrate Modest Gains

According to the National Association of Realtors (NAR), existing-home sales rose 1.7% month-over-month in February, reaching a seasonally adjusted annual rate of 4.09 million units. NAR Existing-Home Sales Report Despite this increase, sales remain 1.4% lower than in February 2025, indicating ongoing hesitancy among buyers.

The gains were not uniform across the country. Sales increased in the Midwest, South, and West, but declined in the Northeast. Year-over-year sales figures mirrored this trend, with increases in the South and declines in the Northeast, Midwest, and West.

Affordability Improves, But Inventory Remains a Challenge

Housing affordability saw its eighth consecutive month of improvement, with NAR’s Housing Affordability Index rising to 117.6 in February, up from 117.1 in January and 103.1 a year ago. NAR Existing-Home Sales Report This marks the highest level since March 2022.

“Housing affordability is improving, and consumers are responding,” said NAR Chief Economist Dr. Lawrence Yun. NAR Existing-Home Sales Report “Still, there is a long way to go to return to pre-pandemic levels of transaction activity.”

Inventory remains a significant constraint, with 1.29 million units available at the complete of February, a 2.4% increase from January and a 4.9% increase from February 2025. NAR Existing-Home Sales Report This represents a 3.8-month supply at the current sales pace, unchanged from January. A six-month supply is generally considered a balanced market.

A notable trend is the relisting of homes previously taken off the market. Approximately 45,000 homes that were delisted in 2024 were relisted in January, the highest figure for January in a decade. Yahoo Finance

Mortgage Rate Volatility Raises Concerns

The average 30-year fixed-rate mortgage in February was 6.05%, down from 6.10% in January and 6.84% a year ago. NAR Existing-Home Sales Report However, recent increases, pushing rates to an average of 6.14%, are causing concern.

“Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” Yun added. NAR Existing-Home Sales Report “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are too measurably lower compared to a year ago.”

NAR is “concerned” about the recent rate increases, though Yun doesn’t anticipate a return to the high rates of the 1970s. Yahoo Finance

Price Trends and Buyer Activity

The median existing-home sales price increased 0.3% year-over-year to $398,000, an all-time high for any February. NBC26 Sales remain strongest in the higher price categories, while activity on the lower end of the market has slowed.

The average time to sell a home has increased to 47 days, up from 42 days a year ago. First-time buyers accounted for 34% of sales, up from 31% a year ago, while investors represented 16% of sales, unchanged from the previous year.

Looking Ahead

The housing market’s trajectory remains sensitive to mortgage rate fluctuations. While affordability improvements and increased inventory offer positive signs, rising rates could quickly dampen buyer enthusiasm. Continued inventory growth will be crucial to limiting price increases and boosting transaction volume as the spring buying season unfolds.