March 20, 2025 – In a surprising turn of events, the U.S. housing market saw a significant uptick in previously owned home sales this February, defying predictions amid persistently high mortgage rates. According to data released today by the National Association of Realtors (NAR), existing home sales climbed 4.2% from January to a seasonally adjusted annual rate of 4.26 million units, surpassing economists’ forecasts of a more modest 3.92 million pace.
The increase comes despite mortgage rates hovering in the high 6% range, a level that has deterred many prospective buyers in recent years. Lawrence Yun, NAR’s chief economist, attributed the unexpected jump to a combination of growing inventory and pent-up demand finally breaking through. “Home buyers are slowly entering the market,” Yun said in a statement. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”
This February’s sales figures reflect contracts likely signed in December and January, a period when mortgage rates briefly touched the 7% mark before settling back into the high 6% range. The resilience of the market in the face of these rates suggests a shift in buyer behavior, possibly driven by an increase in available homes. NAR reported that housing inventory rose to 1.04 million units last month—the highest February level since 2020 and a 15% jump from the previous year. This uptick in supply, despite a nearly 5% slowdown in new listings compared to last year, appears to have given buyers more options and confidence to act.
While the month-over-month increase is notable, sales did dip slightly by 1.2% compared to February 2024, snapping a five-month streak of year-over-year gains. This mixed performance underscores the delicate balance in today’s housing market, where affordability remains a challenge, yet demand persists. The average 30-year fixed mortgage rate, as reported by Freddie Mac, stood at 6.63% earlier this month, down from a peak of 7.79% in late 2023 but still far above the historic lows of 2020 and 2021.
Economists and real estate analysts had anticipated a sluggish start to 2025, given the high borrowing costs and an ongoing affordability crisis fueled by years of rising home prices and limited supply. Yet, February’s data suggests that buyers may be adapting to the “new normal” of higher rates. “The market is showing signs of stabilization,” said Danielle Hale, chief economist at Realtor.com. “While we’re not seeing a dramatic surge, the fact that sales exceeded expectations indicates that buyers are finding ways to navigate these conditions.”
The median home price in February also reflected a cooling trend, with typical home values rising just 2.1% year-over-year—the slowest growth in 18 months and the lowest for any February since 2012. This slowdown in price appreciation, coupled with more homes on the market, could signal a shift toward a more balanced market, where neither buyers nor sellers hold a clear upper hand—a dynamic not seen at this time of year since 2019, according to Zillow’s market heat index.
Looking ahead, experts remain cautiously optimistic. The Federal Reserve’s decision to hold interest rates steady at its latest meeting, combined with forecasts of potential rate cuts later in the spring or summer, could further ease mortgage rates and bolster buyer activity. However, uncertainties loom, including the potential impact of proposed tariffs and a weakening economic outlook, which could temper growth.
For now, February’s unexpected surge in home resales offers a glimmer of hope for a housing market that has been largely stagnant over the past two years. As spring approaches—the traditional peak season for real estate—observers will be watching closely to see if this momentum carries forward or if high rates continue to keep the market in check.
