There's a paradox at the heart of the housing market that seems hard to overcome, according to Lawrence Yun, chief economist of the National Association of Realtors (NAR). Wages are up and mortgages are down – but housing demand is still lagging.
"Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago. Yet despite the modest gain in home sales, actual housing demand remains muted," Yun commented about NAR's February existing home sales report.
Indeed, the average 30-year fixed rate mortgage fell from 6.1% in January to 6.05% in February.
Month-over-month from January to February, existing home sales rose by 1.7% to a seasonally adjusted annual rate of 4.09 million. But year-over-year, sales dipped by 1.4%, while the median price of an existing home rose 0.3% to $398,000 – the 32nd month where prices climbed.
During February, unsold inventory increased 2.4% to 1.29 million units, up 4.9% year-over-year.
The paradox exists even though NAR found that affordability improved for the eighth consecutive month, reaching its highest level since March 2022. Even so, Yun said, the market has a long way to go to return to pre-pandemic activity levels. While six million jobs have been added since 2019, home sales have slipped by one million per year.
Yet, the market might be trending in the right way, as annual housing affordability improved in every region of the country. Nationally, NAR's housing affordability index climbed to 117.6 in February, compared to 117.1 in January and 103.1 in February 2025. It rose 10% in the Northeast, 11.7% in the Midwest, 14.1% in the South and 17% in the West.
Month-over-month, single-family home sales rose by 2.5% to a seasonally adjusted rate of 3.73 million but fell 1.1% from year-ago levels. The median home price edged up 0.2% to $401,800 over the year. Notably, 34% of sales were to first-time buyers, up from 31% the previous month.
Condo and co-op sales continued their downward trajectory, falling 5.3% month-over-month to 360,000. But their median price moved up 0.9% to $358,100 compared to February 2025.
Most of the month's deal slump occurred in the Northeast, where sales fell 6% to an annual rate of 470,000, though median home prices rose 3.3% to $479,800 during the year.
The West enjoyed the greatest increase in monthly sales, improving 8.2% to an annual rate of 790,000, still 1.3% below their 2025 level. Median prices fell 1.9% to $603,000 during the year.
In the South, sales rose 1.6% month-over-month to an annual rate of 1.89 million, 0.5% higher year-over-year and median prices also rose 0.2% to $356,000 in the period.
The Midwest, while it saw a 1.1% month-over-month sales boost to an annual rate of 940,000, was still 4.1% lower year-over-year. The median price rose 2.3% during the year to $302,100.
Even though sales improved, it took an extra day to sell them – a median of 47 days compared to 46 days in January. Almost one-third of transactions (32%) were cash sales, four percentage points higher than in January and 16% of purchasers were individual investors or second-home buyers. Distressed sales, such as foreclosures and short sales, accounted for 3% of transactions.
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