Signs emerge of a thaw in the housing market

By Greg Robb

Existing-home sales were better than expected in February

A sold sign in San Francisco.

Don't look now, but the housing market seems to be showing some signs of life after being in a deep freeze since 2023.

"There are nascent signs that lower mortgage rates are thawing out the market," Ben Ayers, senior economist at Nationwide, said in a note to clients.

The pace of existing home sales increased 1.7% in February to a 4.09 million seasonally adjusted annualized selling rate. January sales were also revised higher.

Economists polled by MarketWatch had projected existing-home sales to drop to a 3.86 million pace.

"Buyers rushed to take advantage of mortgage rates falling below 6% for the first time since 2022," said Heather Long, chief economist at Navy Federal Credit Union.

"Buyers are on the hunt for good deals," she added.

The bright spot in the report is improving affordability, said Priscilla Thiagamoorthy, senior economist at BMO Capital Markets. The median home selling price rose just 0.3%. As a result, the NAR Housing Affordability Index rose for the eighth straight month to 117.6, its highest level since March 2022.

The fall in the average 30-year mortgage rate since the start of the year suggests that existing home sales will rise to 4.4 million soon, said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.

Nancy Vanden Houten, lead U.S. economist at Oxford Economics, said she expects home sales to improve gradually over the course of the year. That forecast is based on the assumption that the conflict in the Middle East doesn't last for more than a few months.

-Greg Robb

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03-10-26 1219ET