Existing home sales increased by 1.7% in February from January, reaching a seasonally adjusted annualized rate of 4.09 million units, signaling a slight uptick for the housing market at the start of 2026.
This improvement comes despite sales remaining 1.4% lower compared with February of last year, highlighting that momentum is still fragile in a market confronted by rising mortgage rates and persistent inventory constraints.
Lawrence Yun, chief economist for the National Association of Realtors, noted, “Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains.”
Lower mortgage rates earlier in the year temporarily boosted affordability, with rates hovering near 6% for a 30-year fixed mortgage, compared with roughly 7% a year prior, providing some relief to buyers looking to enter the market.
Yun highlighted, “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.”
Housing inventory remains a key limiting factor, with 1.29 million units available at the end of February, representing a 2.4% increase from January and a 4.9% rise from February 2025, yet still only a 3.8-month supply, well below the balanced market threshold of six months.
Redfin reports show that nearly 45,000 homes previously delisted are returning to the market, marking a record 3.6% of January listings and the highest re-listing volume since the metric began being tracked a decade ago.
Yun added, “Inventory is growing, but sluggishly. 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.”
Despite tight supply, median home prices increased only slightly to $398,000, up 0.3% year over year, while sales remain strongest in high-end properties above $1 million and weakest at the lower end of the market.
The average time on market rose to 47 days, up from 42 days a year ago, while first-time buyers represented 34% of sales, slightly higher than 31% a year prior, and investors accounted for 16% of purchases, unchanged from last year.