Home sales improved in February, a sign that lower mortgage rates are bringing some buyers off the sidelines, even as overall demand remains muted.
Existing home sales rose 1.7% from January to a seasonally adjusted annual rate of 4.09 million, according to National Association of Realtors data released on Tuesday. Sales improved in all parts of the country except the Northeast, which experienced a prolonged cold snap and a blizzard in February.
Home sales are up month over month — but that follows a dismal January. Sales dropped 5.9% that month following data revisions. And sales are still down 1.4% compared to February 2025, a sign that many buyers are skittish even in an environment where lower mortgage rates and easing home price appreciation have helped affordability.
Read more: Key factors impacting homebuyers and sellers this month
“The housing affordability improvement and the modest gain in home sales is welcoming, but we are still underperforming in the big picture.” NAR chief economist Lawrence Yun said.
Mortgage rates last month averaged 6.05%, near the lowest level in several years. Those rates likely coaxed some buyers, especially first-timers, back into the market, Yun added.
But in recent days, marked volatility stemming from the war in Iran has pushed mortgage rates higher to an average of 6.14%. That move has NAR “concerned,” Yun said. He doesn’t view a repeat of the 1970s, when higher oil prices pushed mortgage rates north of 18%, as likely, but he did note that higher inflation from an oil shock can lead to higher mortgage rates.
Claire Boston is a Senior Reporter for Yahoo Finance covering housing, mortgages, and home insurance.