Home sales increased in February after a sharp decline the previous month, as buyers took advantage of falling mortgage rates.
However, sales remain below pre-pandemic levels despite improved affordability, highlighting ongoing challenges in the housing market. Politicians remain focused on affordability issues ahead of the midterm elections, with both parties pushing legislation to make housing more affordable.
Sales of existing homes increased 1.7% month-over-month to a seasonally adjusted annual rate of 4.09 million in February, according to the latest figures from the National Association of Realtors.
Year over year, home sales fell 1.4%, while the median price rose 0.3% to $398,000.
NAR reported improved affordability for the eighth consecutive month, according to its Housing Affordability Index. That marks the highest level since March 2022.
“Housing affordability is improving, and consumers are responding,” NAR Chief Economist Dr. Lawrence Yun said. “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 one million.”
Limited housing supply has driven up home prices in recent decades. In 2025, the median age for a first-time home buyer hit a record high of 40. The situation remains complex, with multiple factors influencing both prices and affordability.
“Inventory is growing, but sluggishly,” he added. “If demand picks up notably in the coming months and outpaces supply growth, home prices will inevitably rise. That is why increasing supply is so important to help limit home price growth, improve housing affordability, and boost transactions.”
The war in Iran could also affect housing, but it’s too soon to tell how much.
“The war could make some would-be buyers think twice, much in the same way economic and global uncertainty have been turning off buyers for the last year, and it’s likely to cause short-term volatility in mortgage rates,” said Chen Zhao, Redfin’s head of economics research. “But the war’s impact on the economy will mostly be felt in oil markets, which are unlikely to have a big impact on mortgage rates or demand unless the conflict goes on much longer than expected.”
Total housing inventory was 1.29 million units in February, up 2.4% from January and 4.9% from February 2025. That’s a 3.8-month supply of unsold inventory, unchanged from last month and up from 3.6 months one year ago.
Home prices continued to climb. The median sales price in February was $398,000, up 0.3% from one year ago ($396,800). It is the 32nd consecutive month of year-over-year price gains.
The average 30-year fixed-rate mortgage in February was 6.05%, according to Freddie Mac, down from 6.10% in January and 6.84% a year earlier.
