Key takeaways

  • First‑time buyers accounted for 34% of existing‑home purchases in February, the highest share since April 2025.
  • Existing‑home sales rose 1.7% in February from the previous month to an annual rate of 4.09 million, though overall activity remained sluggish.
  • The number of homes for sale increased to 1.29 million units, up 2.4% from January and 4.9% from a year earlier.

The share of first-timers who bought existing homes in February was at its highest level since April 2025, a possible sign of improved affordability.

But the overall market for previously owned single-family houses and condos remained sluggish last month, according to the National Association of Realtors, as sales increased a modest 1.7% from the previous month to a seasonally adjusted annual rate of 4.09 million. Sales were down 1.4% year over year.

On the bright side, the NAR revised its report of January’s sales upward. It had reported sales fell 8.4% that month to 3.91 million but later put it at 4.02 million.

Three of the nation’s four major regions saw an uptick in sales last month compared to January:

Region % increase in sales month over month
Northeast -6%
Midwest +1.1%
South +1.6%
West +8.2%
Source: National Association of Realtors  

But year over year, sales were down in most regions:

Region % change year over year Median sales price % change year over year
Northeast -4.1% $479,800 +3.3%
Midwest -4.1% $302,100 +2.3%
South +0.5% $356,800 +0.2%
West -1.3% $603,100 -1.9%
Source: National Association of Realtors      

It’s unclear whether this month’s uptick in first-time buyer activity is a sign of a lasting shift or a one-month blip, Lawrence Yun, the organization's chief economist, said in a press briefing. But he credited 30-year mortgage rates that briefly dipped below 6% and incomes rising faster than prices for a general improvement in affordability.

“It really comes down to financial capacity,” he said. “Many times, the rate has the biggest impact — people who were denied a mortgage a year ago when the rate was 7%, now qualify.”

Lower monthly payments mean more affordability

Affordability improved for the eighth consecutive month, according to the organization's calculations, edging up from 117.1 in January to 117.6 in February, marking the highest level since March 2022. A year ago, it stood at 103.1. The average homeowner spends under $2,000 per month on a mortgage payment, or roughly 21% of one's income, according to NAR. The percentage, which doesn’t account for property taxes or home insurance, was more than 24% a year ago.

Affordability improved in all four regions, with the West leading the charge:

  • Northeast (+10%)
  • Midwest (+11.7%)
  • South (+14.1%)
  • West (+17%)

“Housing affordability is improving, and consumers are responding,” 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.”“Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” he said. “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.”

To be sure, an ongoing challenge for the existing-home market is low inventory, despite a 2.4% increase in February from the previous month to 1.29 million units, which equates to a 3.8-month supply. Experts say a balanced market has four to six months' worth. The number of homes for sale was up 4.9% from one year earlier, but Yun said it's still too few.

If buyer demand increases markedly this spring, he said, it could lead to higher home prices.

 

“Existing-home sales were a touch stronger than expected in February and will gradually improve this year, assuming the US/Israel war with Iran doesn't persist long enough to push interest rates higher or weaken the labor market,” Nancy Vanden Houten, lead economist for Oxford Economics, said in a statement.

She added that if mortgage rates remain near 6%, more homes are likely to come on the market as the spring homebuying season gears up.