In February, listing prices grew at a double-digit annual pace nationwide
New data suggests Spring homebuying fever has already set in, as the U.S. median listing price hit a new all-time high of $392,000 in February, according to the Realtor.com® Monthly Housing Trends Report released today. Additionally, home prices grew at an unusually fast February pace in many of the 50 largest metros, led by Las Vegas, Miami and Tampa, Fla. with annual increases of at least 31% each.
“Over the last five years, we have seen home prices break records early in the season as buyers try to get ahead of the competition. But this is the first time the record has been broken in February, signaling that competition is already heating up weeks before the start of the Spring buying season in a typical year,” said Realtor.com® Chief Economist Danielle Hale. “While the number of homes on the market remains woefully behind buyer demand, in February we saw declines in new listings improve for the first time since November 2021, indicating potential hope on the horizon. Whether inventory continues to improve will depend on a variety of economic and geopolitical factors, including the conflict in Ukraine and mortgage rate hikes, which haven’t impacted home sales or price growth so far, but will increasingly lessen buyers’ purchasing power.”
The national listing price broke a new record in February, signaling an early start to the 2022 Spring buying season
Housing affordability is increasingly an issue for 2022 buyers, partly due to climbing mortgage rates, which reached the highest level in nearly three years within the first two months of the year. With further hikes looming, February data suggests competition intensified as motivated buyers raced to lock in relatively affordable monthly payments. As a result, the national listing price exceeded the record set during the 2021 summer frenzy. While it’s not uncommon for home price growth to begin accelerating in February, Realtor.com® data history shows listing prices didn’t surpass previous peaks until at least March in every year from 2017-2021.
Inventory improvements offer buyers a potential light in the supply shortage storm
For the first time since last fall, yearly inventory declines improved slightly in February, largely due to rising numbers of new sellers. In fact, during the final two weeks of the month, more new sellers entered the market than during the same time last year. Further new listings growth, which is typical heading into the spring, will be key to inventory’s forecasted recovery from 2021 lows. However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand. Additionally, recent bigger picture developments, like geopolitical tensions in Europe, could play a wildcard in consumer sentiment related to major financial decisions, including homebuying and selling.
Homes continue to fly off the market, selling a month faster than in 2017-2019
Following a record-setting first month of the year, February time on market trends showed no signs of slowing down. Likely motivated in large part by climbing mortgage rates, buyers snatched up the inventory of new and active listings more quickly than in any prior February, and over a month faster than in 2017-2019, before the onset of COVID. Relative to national time on market, home sales notched an even faster-moving February across the 50 largest U.S. metros, only three of which posted time on market gains.
“It can be easy to get swept up in competition, so buyers should take the time to assess how higher mortgage rates could impact the affordability of monthly payments and consider adding a cushion at the top of their budgets. Tools like the Realtor.com® Mortgage Calculator can help you scenario plan for various rates so you’re better prepared – not only for a successful buying experience, but also to comfortably afford your monthly housing costs once you have the keys in-hand,” said George Ratiu, Manager of Economic Research and Senior Economist at Realtor.com®.
Ratiu’s advice is also relevant to the many sellers simultaneously buying a home, who can use tools like the Realtor.com® Seller’s Marketplace to help them manage the many fast-moving parts of both processes and explore selling options like initial cash offers from Opendoor.
For more information, visit Realtor.com.