Existing Home Sales rose 14.5% from January to February to a 4.58 million unit annualized pace, per the National Association of Realtors (NAR), coming in much stronger than estimates and ending twelve consecutive months of declines. Sales were 22.6% lower than they were in February of last year, though this is less than the nearly 37% annual decline seen in January. This report measures closings on existing homes, which represent around 90% of the market, making it a critical gauge for taking the pulse of the housing sector.

What’s the bottom line? February’s data showed signs of strength in the housing market, despite media headlines to the contrary. For example, while there was a 0.2% decline in the median home price to $363,000 from a year earlier, this is not the same as a decline in home prices as some reports implied. The median home price simply means half the homes sold were above that price and half were below it, and this figure can be skewed by the mix of sales among lower-priced and higher-priced homes. Real appreciation data per the latest Case-Shiller Home Price Index showed that home prices were 5.8% higher than a year earlier.

In addition, there were 980,000 homes available for sale at the end of February, up from 850,000 a year earlier. However, this inventory increase is from a record low level and overall, supply is still much lower than in a balanced market. Homes stayed on the market on average for 34 days, while 57% of homes sold in February were on the market for less than a month, which also speaks to continued demand for homes. NAR’s Chief Economist Lawrence Yun noted that, “Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties."