U.S. Existing Home Sales Surge Past Expectations In February

Sales of previously owned homes in the United States exceeded analysts' expectations in February 2025, marking a significant rebound in the housing market. The National Association of Realtors (NAR) reported that existing home sales climbed 4.2 percent last month to an annual rate of 4.26 million, seasonally adjusted. This increase outperformed the consensus forecast, which anticipated sales at 3.95 million units.

According to NAR’s chief economist Lawrence Yun, there is a notable trend occurring in the housing market. "Home buyers are slowly entering the market," he stated. "Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand." This uptick in sales is a positive development, particularly in light of the recent economic uncertainties that continue to loom over the marketplace.

Despite this promising performance, year-over-year sales compared to February 2024 revealed a slight decline of 1.2 percent. Additionally, the median price of existing homes reached $398,400 last month, reflecting a 3.8 percent increase from the same period a year prior. This price surge indicates a growing demand amid increasing inventory levels, which saw a 5.1 percent rise in availability to 1.24 million units in February.

Moreover, the popular 30-year fixed-rate mortgage averaged around 6.8 percent by February 27, slightly down from earlier highs. Although the Federal Reserve has held its benchmark overnight interest rate stable in the range of 4.25 to 4.50 percent, there are indications that borrowing costs could be reduced in the coming months as the central bank anticipates a half percentage point cut by year’s end.

Interestingly, while February's sales figures reflected positive changes, pending contracts—often an indicator of future sales—had dropped in the previous months. This situation developed even as the average mortgage rate hovered around 7 percent late last year, suggesting a complex interplay of market factors influencing buyer behavior.

Buyers are gradually adapting to the changing landscape, with first-time buyers now accounting for 31 percent of sales, up from 26 percent a year ago. However, industry experts suggest that a robust housing market typically requires this demographic to comprise about 40 percent of overall sales to stabilize and sustain growth.

In a broader context, Yun expressed concern about the possible impacts on housing demand resulting from changes in federal employment dynamics. The ongoing government efficiency initiatives spearheaded by Elon Musk's Department of Government Efficiency (DOGE) could lead to job losses in the District of Columbia. Yun noted, "We will see whether or not the job cuts in DC begin to change some of the dynamics in the DC housing market." This adds another layer of complexity as future economic conditions unfold in the capital.

In summary, while February's existing home sales indicate a moment of promise in the U.S. housing market, economists remain cautious. The delicate balance of inventory, buyer sentiment, and governmental policies will play a crucial role in determining the trajectory of home sales moving forward. With the overall economic landscape marked by volatility, the unfolding months may dictate whether this uptick leads to sustained recovery or remains a fleeting phenomenon.