Real estate market awakens from 'winter hibernation'

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Published Date 3/24/2025

Along with the rites of spring comes the spring thaw, and those buds emerging from their winter sleep are encouraging in the real estate world right now. And the NAR (National Association of Realtors)’ Chief Economist Lawrence Yun says new housing momentum is “flashing encouraging signs” for the market.

“A notable uptick in housing inventory nationwide may be pulling the real estate market out of a long winter hibernation,” says Realtor Magazine’s Melissa Dittmann Tracey, who reports that total existing-home sales, which account for completed transactions for single-family homes, townhomes, condos and co-ops, rose 4.2% month over month in February.

Yun confirms that home buyers are slowly entering the market despite how mortgage rates and home prices appear frozen at elevated levels as more inventory and choices are releasing pent-up housing demand.

The NAR reports existing-home inventory climbing 5.1% month over month in February and is up 17% from a year ago. Also adding to the housing supply, single-family construction rose 11.4% last month, reaching the highest pace in a year, the Commerce Department reports.

It was also reported that the median price for an existing home increased 3.8% to $398,400 in February, with all four major regions of the U.S. recording price gains last month, led by a 10.4% annual increase in the Northeast.

How is this measured? A simple calculation: “Each one percentage point gain in home price translates into an approximately $350 billion increase in housing equity for American property owners,” Yun says. “That means a gain of nearly $1.3 trillion in home value appreciation at a time when the stock market is undergoing a correction.”

He also says that the recent uptick in inventory is not a reason for home prices to soften, however. “The ongoing housing shortage, coupled with historically low mortgage default rates, implies a solid foundation for home values.”

“Some home sellers may be leveraging their equity in the next home purchase,” says Tracey, citing the NAR report. “Cash sales comprised about a third of home sales in February, continuing to command a historically high share of the market. Individual investors and second-home buyers comprise a sizable portion of cash sales, purchasing 16% of homes in February, which is down from 21% a year ago.”

With high home prices and mortgage rates steady but still considered high for many home buyers, affordability is still an issue. Despite these challenges, first-time home buyers comprised 31% of existing-home sales in February, up from 24% a year earlier, says Tracey. As housing inventory rises, so rises the share of first-time home buyers.

Overall, buyer demand remains strong despite cost pressure with 21% of homes sold above list price last month, according to the REALTORS® Confidence Index, all based on NAR members’ most recent transactions. The average home on the market received 2.3 offers in February, and about 50% of agents say their listings sold in less than a month.

Incentives remain the bottom line for homebuilders, however. Nearly 60% of builders in March used sales incentives, such as covering closing costs, design credits or mortgage-rate buydowns, the NAHB (National Association of Home Builders) reports. To boot, 29% of builders cut their prices in March, with an average 5% price reduction.

Regionally, existing-home sales jumped the most in the West while faltering in the Northeast, even as home prices there soared. The northeast has existing-home sales up 4.2% from a year earlier and median prices reaching $464,300, up 10.4% year over year. In the Midwest,sales remained unchanged from January but up 1% from the prior year. Median prices there reflect $295,500, up 5.8% from a year ago. In the South, sales climbed 4.4% month over month but were down 4% from a year before. The median price was $358,800, up 1.9% from last year. And in the West, sales jumped 13.3% to an annual rate of 850,000 — identical to a year ago. Median price: $614,600, up 3.6% from last year.

RealtorMag, TBWS

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