New listings jumped 3.8 percent month-over-month on a seasonally adjusted basis in February to the highest level since September 2022, according to a new report from Redfin.
They were up 14.8 percent year-over-year, the largest annual gain since May 2021.
Active listings, or the total supply of homes for sale, hit the highest level in a year. They climbed 0.8 percent from a month earlier on a seasonally adjusted basis and were little changed (-0.1 percent) from a year earlier – the smallest annual decline in months.
New listings rose fastest from a year earlier in Texas and active listings rose fastest in Florida, the two states that have been building the most homes. In Florida, condo listings in particular are contributing to the jump in supply amid a surge in homeowners association and insurance fees.
“The housing market is nothing like it was two years ago during the pandemic homebuying frenzy, but it’s better than it was last year. It’s coming back,” David Palmer, a Redfin Premier real estate agent in Seattle, said in a release. “Sellers who were on the fence in 2023 are now listing. They’re more used to elevated rates now. There still aren’t enough listings to quench pent-up buyer demand, but it’s getting better.”
Nationwide, housing supply is on the rise because the “lock-in effect” is easing; eventually, homeowners who have been holding on to their ultra-low mortgage rates simply have to move.
“February was a mixed bag for the housing market and the economy,” said Redfin Economics Research Lead Chen Zhao. “Housing supply is finally starting to recover in a meaningful way, which is great news for buyers who for months have been competing for a tiny pool of homes for sale. Still, many house hunters are hesitant to pull the trigger because mortgage rates and home prices remain elevated.”
Mortgage-purchase applications slid in February as mortgage rates ticked back up after dropping in December. The average 30-year-fixed mortgage rate was 6.78 percent last month, up from 6.64 percent in January. Mortgage rates will likely remain elevated a bit longer than expected after this week’s inflation report came in hotter than anticipated.
Home sales rose 0.5 percent month-over-month on a seasonally adjusted basis in February, and fell 3.5 percent year over year, Redfin added.
The median U.S. home sale price climbed 6.6 percent year-over-year – the biggest uptick since September 2022 – to $412,778. Redfin noted home price data is not seasonally adjusted, which is why it focuses on year-over-year changes for this metric.
Prices continue to rise because despite the recent uptick in listings, there’s still not enough supply to meet demand. Both new listings and active listings remained far below pre-pandemic levels in February.
“If you price your home reasonably, buyers will show up. If you don’t, buyers will wait for you to drop the price,” Palmer said. “I recently listed an estate sale fixer upper for $550,000 and it got 14 offers, sold for $75,000 over the asking price and the buyer waived every contingency.”
In Seattle, 77.4 percent of homes that went under contract did so within two weeks – the highest share among the metros Redfin analyzed. It took the top spot from Rochester, N.Y., which has held that title for months. The typical home that went under contract in Seattle did so in 11 days (versus a national median of 48 days), according to Redfin.