Sales of existing homes fell 3.1 percent in February, the second straight monthly decline, as buyers put off purchases because of higher mortgage interest rates, a real estate trade group reported.
The National Association of Realtors said sales of existing single-family homes dropped to a seasonally adjusted annual rate of 3.44 million units in February following a 9.4 percent decline in January.Last month's sales pace was the slowest since March 1988, when the annual rate was 3.38 million units.
The Realtors attributed the drop in sales to the Federal Reserve Board's yearlong campaign to drive up interest rates in an effort to slow the economy and ease inflationary pressures.
"The Fed's credit stance is working," said Realtors President Ira Gribin. "Interest rates are pushed up and buyers are pushed out."
Fixed-rate home mortgages last month averaged between 10.55 percent and 10.78 percent, according to the Federal Home Loan Mortgage Corp. On one-year adjustable rate mortgages, lenders were asking an average initial rate of between 8.56 percent and 8.73 percent.
The median price of an existing home sold last month rose as buyers in the lower price ranges stayed out of the market due to the higher rates.
The median price of existing homes sold in February rose 3.8 percent to $93,100, meaning half the homes sold for more and half sold for less.
"Generally, in times of rising rates, the people left in the market tend to be upper-income buyers who can buy the house they want regardless of less affordable financing," said John Tuccillo, chief economist for the Realtors.
February's decline in home sales was led by a sharp drop in the Northeast, where resales at a seasonally adjusted annual rate of 580,000 were down 18.3 percent from the previous month.
Sales in the South were down 0.8 percent to an annual rate of 1.3 million units, and sales dropped 1.1 percent in the Midwest to an annual rate of 920,000 units.
The West was the only region to record an increase in sales last month, with the annual rate rising 3.2 percent to 650,000 units.