WASHINGTON (AP) -- U.S. home sales soared 11.8 percent in February, aided by accelerating wages and falling mortgage rates that are improving affordability.
The National Association of Realtors said Friday that existing homes sold at a seasonally adjusted annual rate of 5.51 million last month, a decisively sharp rebound from a pace of 4.94 million in January.
The burst in sales points to the housing market regaining the momentum that it lost in the middle of 2018, after a spike in rates for home loans caused sales to slow. The February sales figures point toward growth in sales of homes priced between $250,000 and $500,000, a range that is generally affordable to middle-class families.
"This was fueled principally by an improvement in affordability resulting from a combination of slower house price gains, lower mortgage rates and more rapid wage growth," said David Berson, chief economist at Nationwide Mutual Insurance.
Still, existing-home sales are down 1.8 percent from a year ago because of the severity of last year's slowdown. But 30-year mortgage rates have since tumbled after peaking in early November at roughly 5 percent, helping sales to recover as that average has fallen to 4.28 percent this week, according to mortgage buyer Freddie Mac.
Mortgage rates will likely fall further. The Federal Reserve indicated this week that it foresees no further interest rate increases this year --- a message that has sent the yield on the 10-year Treasury note plunging. Rates on long-term mortgages closely track the 10-year yield.
The median sales price in January was $247,500, a slight increase of 3.6 percent from last year. Home price growth has been converging with average hourly wage gains in recent months.
However, February's sales bust caused the months' supply of homes on the market to tumble to 3.5 months from 4.4 months in September.
Sales climbed in the Midwest, South and West in February but were unchanged in the Northeast.