Home Sales Rose in February as First-Time Buyers Jumped Back Into the Market

Sales of existing homes rose in February as mortgage rates touched a three-year low, prompting more first-time homebuyers to enter the market.

Existing-home sales, based on closings, were at a seasonally adjusted annual rate of 4.09 million last month, a 1.7% gain from the upwardly revised January figure, the National Association of Realtors® reported on Tuesday. February's sales pace was down 1.4% from a year earlier.

First-time homebuyers accounted for 34% of February sales, up from 31% the prior month and matching the highest share recorded in the past five years.

Prices continued to rise marginally, with the median existing-home sales price increasing 0.3% from a year ago to $398,000. The modest uptick means typical incomes grew faster than home prices over the same period.

"Housing affordability is improving, and consumers are responding," says NAR Chief Economist Lawrence Yun. "Still, there is a long way to go to return to pre-pandemic levels of transaction activity. There are more than 6 million more jobs than in 2019, yet home sales per year are down by 1 million."

On a monthly basis, sales rose in the Midwest, South, and West, and fell in the Northeast, which suffered several rounds of winter storms in February. Compared to last year, only the South saw rising sales.

Mortgage rates eased steadily for the first few months of 2025, touching a three-year low of 5.98% in the last week of February, according to Freddie Mac.

"Buyers who closed on a home in February benefited from some of the lowest mortgage rates since September 2022," says Realtor.com® Chief Economist Danielle Hale. "Mortgage rates moved even lower in February, which is likely to boost March home sales, before beginning to tick higher in March as conflict in Iran introduced uncertainty and the potential for an uptick in oil and other goods and services prices."

The U.S.-Israeli war with Iran that began in early March sent oil prices spiking, a red flag for inflation risk that is sending mortgage rates higher. If the conflict widens, it may also raise economic uncertainty for buyers, threatening to derail the crucial spring housing season.

Inventory rises ahead of spring buying season

In a positive sign for spring, total housing inventory hit 1.29 million units at the end of February, up 2.4% from January and 4.9% from February 2025.

At the current sales pace, it amounted to a 3.8-month supply of unsold inventory, unchanged from last month and up from 3.6 months one year ago.

Time on the market ticked up, with the typical home spending 47 days on the market before going under contract, up from 46 the prior month and 42 in February 2025.

On a regional basis, home sales declined 6% in the Northeast compared with January to an annual rate of 470,000, also down 4.1% year over year. 

The other regions saw monthly gains, led by the West with an 8.2% increase in sales month over month to an annual rate of 790,000. However, that figure was down 1.3% year over year.

Sales in the South increased 1.6% month over month to an annual rate of 1.89 million, up 0.5% year over year.

In the Midwest, sales increased 1.1% month over month to an annual rate of 940,000, down 4.1% year over year.