HOUSTON (ICIS)--US sales of existing homes were at an annual rate of 6.22m in February, down 6.6% from January after a two month gain, however, sales in total climbed to 9.1% year on year from February 2020, according to the latest data from the National Association of Realtors (NAR) on Monday.
While all four US regions recorded year-over-year gains, the data reveals that only one major region saw an increase in sales during the month of February.
"Despite the drop in home sales for February – which I would attribute to historically-low inventory – the market is still outperforming pre-pandemic levels," said NAR chief economist Lawrence Yun.
Total housing inventory at the end of February was at 1.03m units, equal to January’s inventory and down 29.5% year on year - a record decline.
Unsold inventory sits at a 2.0-month supply at the current sales pace, slightly up from January’s 1.9-month supply and down from the 3.1-month amount recorded in February 2020.
The median existing home price for all housing types in February was $313,000, up 15.8% from February 2020, as prices rose in every region.
Yun said a possible slowdown in growth is likely in the coming months as higher prices and rising mortgage rates could cut into home affordability.
“Various stimulus packages are expected, and they will indeed help, but an increase in inventory is the best way to address surging home costs,” said Yun.
However, sales are still expected to be higher than last year. With COVID-19 vaccinations on the rise and wider availability, the country is on the cusp of returning to a semblance of pre-pandemic normalcy.
The economist expects that with the rising trend of Americans saving higher amounts of money during the pandemic, there is a strong possibility that once the country fully reopens, those reserves will be unleashed on the economy.
US builder confidence for newly built single-family homes remained strong in February despite tight lumber prices and other cost factors.
The housing market is a key consumer of chemicals, driving demand for a wide variety of chemicals, resins, and derivative products, such as plastic pipe, insulation, paints, and coatings, adhesives and synthetic fibres, among many others.
The American Chemistry Council (ACC) estimates each new home represents about $15,000 worth of chemicals and derivatives used in the structure or in the production of component materials.