Sales of existing homes in the United States fell 6.6 percent in February, the National Association of Realtors (NAR) said on Monday, as tightening inventory pushed prices up and kept buyers away.
Last month's seasonally adjusted rate of 6.22 million annualized was worse than analysts expected, yet 9.1 percent higher than February 2020, after the US housing market boomed even as the Covid-19 pandemic caused wider economic malaise.
"Despite the drop in home sales for February -- which I would attribute to historically-low inventory -- the market is still outperforming pre-pandemic levels," the association's chief economist Lawrence Yun said.
Analysts said bad winter weather also made homebuyers delay purchases last month, but warned that the sector could be set for a slowdown in 2021 as rising prices chill demand.
"We look for the pace of existing home sales to drift lower over the course of the year as headwinds from a lack of supply and eroding affordability are partially offset by the tailwinds of still-strong demand, particularly from younger households, and a solid recovery," Nancy Vanden Houten of Oxford Economics said.
Buyers jumped into the housing market in 2020 after the Federal Reserve cut its benchmark lending rate, sending mortgages to record lows.
Construction firms have struggled to keep up with demand, and the NAR said housing inventory as of the end of February was unchanged from January at 1.03 million units, 29.5 percent lower than a year ago.
The median existing home price had meanwhile risen 15.8 percent from February 2020 to $313,000, which Ian Shepherdson of Pantheon Macroeconomics warned was a sign that the housing market was no longer leading the broader US economy's recovery from the Covid-19 downturn.
"The market is stalling, at best, though with sales at a high level, inventory still very low and prices rising rapidly," he said.
The slowdown in sales was widespread, with the two regions most affected by the bad weather, the Midwest and Northeast, seeing the sharpest declines of 14.4 percent and 11.5 percent respectively. Sales in the South decreased 6.1 percent.
The West saw sales gain in February, rising 4.6 percent.