Home Sales Make Record Jump in U.S.

Existing home sales south of the border skyrocketed 11.8% last month over January. Figures released Friday by the National Association of Realtors confirmed it as the largest monthly jump ever, with the exception of a change in mortgage policy in 2015 that temporarily skewed the data.

Realtors pointed squarely to dropping mortgage rates and home prices for the jump in demand.

At the start of last year, housing demand was robust and rates relatively low, with the average rate on the popular 30-year fixed right around 4%, which caused a frenzy in buying through the spring. But with supply remaining tight, prices overheated.

By summer, those prices were moving out of reach, especially as interest rates began rising. By November, the average rate on the 30-year fixed had spiked over 5%, and home sales plummeted.

Mortgage rates then began falling in December and moved decidedly lower in January to around 4.5%, causing the renewed interest in buyer demand. More consumers now believe it is a good time to buy a home and more believe the economy is improving, according to a sentiment survey by the Realtors in the first quarter of this year.

Still, sales in February were 1.8% lower annually, because rates were slightly higher.

But supply also increased, up 3.2% year-over-year in February. Home prices have been moderating for months and were up just 3.6% in February, the smallest annual gain in a few years.