US Home Sales Rise 8.3% in February Amid Declining Mortgage Rates

Existing home sales in the United States rose 8.3% in February, according to the latest data, reaching a seasonally adjusted annual rate of 4.42 million units. This marks the first monthly increase since October 2024 and follows a 2.1% decline in January. The rebound coincided with a sustained drop in mortgage rates, with the 30-year fixed rate averaging 6.8%—down from 7.1% in January and the lowest level since late 2024. The uptick in sales is a notable improvement in housing market dynamics, which had been under pressure from elevated borrowing costs. At the same time, the yield on the 10-year Treasury note declined to 4.32%, reflecting reduced expectations for prolonged high interest rates. This shift contributed to a 2.1% gain in the iShares 20+ Year Treasury Bond ETF (TLT), signaling a flight to safer, long-duration assets. The housing sector’s recovery is expected to support broader economic activity, particularly in consumer discretionary and home improvement categories. As demand picks up, homebuilder stocks, including major names such as D.R. Horton (DHI) and PulteGroup (PHM), saw their shares rise by an average of 3.4% over the week. Concurrently, the VIX index, a measure of market volatility, dropped 4.7% to 17.6, indicating reduced uncertainty around rate policy and growth expectations. The momentum in home sales also has implications for the Federal Reserve’s policy path. With inflation pressures moderating and core PCE inflation cooling to 2.9% year-over-year, the likelihood of a June rate cut has increased, as reflected in Fed funds futures. The energy market, tracked by crude oil futures (CL=F), saw modest gains, as stable housing demand supports near-term economic output and energy consumption.