Good news may have arrived for both buyers and sellers in Tuesday’s housing report.
Since early 2022 when it became clear the Federal Reserve planned to raise interest rates to quell four-decade high inflation, existing home sales turned down.
Home sales slid for 12 consecutive months until February, the National Association of Relators reported on Tuesday. The seasonally adjusted annual rate rose to 4.6 million, offering a few glimmers of hope for sellers after sales fell to a pandemic low in January.
Buyers also received some good news in February as annual price increases fell slightly. That ended 131 months of year-over-year price increases – a sharp contrast to the double-digit increases of early 2022.
While interest rates aren’t the only factor in a decision to buy a home, the correlation is striking between the Fed’s rate increases and changes in the real estate market.
How housing numbers changed as the Fed pushed up rates
The 14.5% increase in existing home sales in February was the biggest percentage change since a 22.4% increase in July 2020 that followed spring pandemic shutdowns. Still, the annualized rate was 22.6% off of February 2022’s pace.
The Fed has been counting on declining home and rental prices to have a greater impact on the consumer price index and other gauges of inflation. February’s 0.2% year-over-year decrease to $363,000 could help in the Fed’s rate decision Wednesday.