Single-family home sales have fallen unexpectedly for the third month in February. Home sales in Midwest and West have also shown a steep decline. According to the Commerce Department, home sales have dropped by a figure of 0.6 percent. This was for a seasonally adjusted rate of 618,000 units. Previously, the sales were reported at 593,000 units. In January, however, the sales pace reached up to 622,000 units.
Home sales drop to an all-time low
New home sales usually make up ten percent of the sales in the housing market. This accounts for a rise of 4.4 percent reaching up to 623,000 units up until February.
Currently, home sales are considered volatile on a monthly basis.
Compared to the previous year, home sales have risen by 0.5 percent this year. In Midwest and West, sales have decreased by 3.7 percent and 17.6 percent respectively.
In the Northeast and South, sales have grown by 19.4 percent and 9 percent respectively.
The current shortage of homes has been responsible for decreasing home sales and the housing market has slowed down. In addition, rising mortgage rates have made buying homes even less affordable.
Currently, the average price of a home stands at $326,800, which is a 9.7 percent increase as compared to the price of a home a year ago. The mortgage rate that had been fixed for thirty years is now hovering at 4.45 percent. The annual growth has been stuck at 3 percent with the unemployment rate at 4.1 percent, a 17 year low. Nearly 305,000 homes became available in the market. This is the highest since March 2009 with an increase of 2 percent.
The number of new homes is lower than the peak of the housing market in 2006.
If sales continue the way it did in February, the supply of houses will take at least 5.9 months to clear. This is the most since August 2017. Out of all the houses sold the previous month, about two-thirds were either under construction or to begin construction.
Prices are surging up despite the fall in home sales.
The rising prices have also affected the sales of luxury homes. The tight market has caused discount levels on luxury homes to hit the highest level in six years.
In addition, rumors of a weakening economy spreading like wildfire has further affected the sales as consumers prepare themselves for a possible recession.