If you were waiting for the housing market to cool off before buying a new home this year, you'll likely have to wait a while longer. Home prices are continuing to break records, and the spring buying season is heating up well ahead of schedule.
New data from Realtor.com shows that the median listing price of homes across the United States reached an all-time high of $392,000 last month — 13% more than in February 2021 and 27% more than in February 2020. Over the past three years, the median listing price has soared by almost $100,000.
At the same time, the number of homes on the market continues to dwindle. There were 25% fewer active listings last month compared to the same month a year earlier, according to Realtor.com. Although that's smaller than January’s 28% yearly decline in listings, it's still a significant gap.
The data clearly illustrates the supply and demand crisis that has shaped the frenzied housing market over the course of the pandemic: Surging demand for homes combined with limited inventory has sent prices soaring to record highs.
The crush of demand has been enough to buck seasonal trends. Usually, the housing market tends to be cooler in the winter months, with activity picking up in the spring and summer.
This year, that movement is happening earlier than it has before.
"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," Realtor.com Chief Economist Danielle Hale said in a statement.
Not only did median listing prices reach a new record high in February, but also homes spent just 47 days on the market last month. That's 17 days fewer than the same time last year and 14 days fewer than the previous month. And with mortgage rates set to rise in the coming months, the market could get even more competitive as prospective buyers race to lock in the cheapest rate and keep their monthly payments as low as possible.
Monthly mortgage payments are up more than 30% over the last year, and experts predict they could increase even further. In a recent blog post, Zillow Senior Economist Jeff Tucker said he expects rising costs to prompt buyers to seek out more affordable homes and neighborhoods than they otherwise would. Some might even delay purchasing a home altogether.
But even in this market, there may still be some good news for prospective homebuyers... depending on where they're located. Realtor.com found that inventory has actually increased in a handful of major American cities, including Phoenix; Sacramento, California; and Austin, Texas.
"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,” Hale said, indicating “potential hope on the horizon.”