Existing Home Sales Plunge As Higher-Rate Impacts Accelerate

While pending home sales tumbled in January, Existing Home sales rebounded but were expected to slide in February as interest rates rose, and they did, dramatically. Against expectations of a 3.0% decline, existing home sales plunged 6.6% MoM in February (January's +0.6% rise was also revised down to a 0.2% rise).

(Click on image to enlarge)

Source: Bloomberg

And while year-over-year sales are still up, the pace has collapsed as SAAR drops to a six-month low...

(Click on image to enlarge)

Source: Bloomberg

The number of homes for sale declined by a record 29.5% in February from a year ago, helping explain a 15.8% jump in the median selling price to $313,000. That was the highest-ever median price for that month.

Purchases of all existing homes fell in three regions, including in the South and Midwest, where the month’s weather impacts were the most severe. In the South, contract closings declined 6.1% to an annualized 2.77 million, the slowest pace in five months. They dropped 14.4% in the Midwest to a 1.31 million rate, the weakest since June. Home sales fell 11.5% in the Northeast and rose 4.6% in West.

The NAR blames supply...

“The fact that even with the decline in sales, days on the market is swift, prices are rising strongly -- it’s implying that demand isn’t disappearing from the marketplace,” Lawrence Yun, NAR’s chief economist, said on a call with reporters.

“It really is a lack of supply.”

But, as Wolf Richter details in his latest report at WolfStreet.com, we suspect that these are the first signs that higher mortgage rates are impacting the housing market.

Mortgage refis have dropped since January, driven by a sharp drop in no-cash-out refis; cash-out refis have also dropped, but less so, for a reason we’ll get to in a moment. This chart shows the Mortgage Bankers Association’s mortgage refi index:

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