According to a new Monthly Housing Trends Report from Realtor.com, home prices hit a record high ahead of spring buying season, as the U.S. median listing price reached $392,000 in February. Home prices also grew at an unusually fast pace in many of the 50 largest metros, led by Las Vegas, Miami, and Tampa, Florida—seeing annual increases of 31% each.
"Over the last five years, we have seen home prices break records early in the season as buyers try to get ahead of the competition. But this is the first time the record has been broken in February, signaling that competition is already heating up weeks before the start of the Spring buying season in a typical year," said Realtor.com Chief Economist Danielle Hale.
Housing affordability is increasingly an issue for 2022 buyers, partly due to climbing mortgage rates, which reached the highest level in nearly three years within the first two months of the year. With further hikes looming, February data suggests competition intensified as motivated buyers raced to lock in relatively affordable monthly payments. As a result, national listing prices broke a new record, exceeding the record set during the 2021 summer housing surge.
In February, the U.S. median listing price increased 12.9% year-over-year to a new all-time high of $392,000, surpassing the 2021 peak at $385,000 in July. Home prices posted smaller yearly gains in the 50 largest U.S. markets, up by an average of 7.8% year-over-year, mostly due to a larger number of smaller homes coming on the market. On average, big metro listing prices per square foot increased nearly as quickly as the overall national pace.
For the first time since last fall, yearly inventory declines improved slightly in February, largely due to rising numbers of new sellers. In fact, during the final two weeks of the month, more new sellers entered the market than during the same time last year. Further new listings growth, which is typical heading into the spring, will be key to inventory's forecasted recovery from 2021 lows.
However, with 5.8 million new homes missing from the market and millions of millennials at first-time buying ages, housing supply faces a long road to catching up with demand. Additionally, recent bigger picture developments, like geopolitical tensions in Europe, could play a wildcard in consumer sentiment related to major financial decisions, including homebuying and selling.
"While the number of homes on the market remains woefully behind buyer demand, in February we saw declines in new listings improve for the first time since November 2021, indicating potential hope on the horizon. Whether inventory continues to improve will depend on a variety of economic and geopolitical factors, including the conflict in Ukraine and mortgage rate hikes, which haven't impacted home sales or price growth so far, but will increasingly lessen buyers' purchasing power," said Hale.
Following a record-setting first month of the year, February time on market trends showed no signs of slowing down. Likely motivated in large part by climbing mortgage rates, buyers snatched up the inventory of new and active listings more quickly than in any prior February, and over a month faster than in 2017-2019, before the onset of COVID. Relative to national time on market, home sales notched an even faster-moving February across the 50 largest U.S. metros, only three of which posted time on market gains.
To read the full report, including charts and methodology, click here.