Earlier this month, pending home sales data from the National Association of Realtors showed that existing home sales could be set to slow down due to “inventory constraints.”
The actual sales data for February is out now, and it is just as expected: a slowdown.
According to new data from NAR, existing home sales declined in February by 6.6% compared to January. That’s the first time that existing home sales have declined in two months.
It should be noted, however, that existing home sales in February 2021 were still up 9.1% from February 2020. But, as NAR Chief Economist Lawrence Yun notes, home sales were significantly impacted by the dearth of available homes.
“Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels,” Yun said.
According to NAR’s data, there were 1.03 million single-family houses available for sale at the end of February, equal to January’s total but down nearly 30% from February 2020.
The lack of inventory is a concern, Yun said, but not one that is expected to derail the housing market’s performance in 2021.
"I still expect this year’s sales to be ahead of last year's, and with more COVID-19 vaccinations being distributed and available to larger shares of the population, the nation is on the cusp of returning to a sense of normalcy," Yun said. "Many Americans have been saving money and there's a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy."