The latest existing home sales report for February 2026 shows a modest increase in housing market activity. According to new data from the National Association of Realtors (NAR), existing home sales rose by 1.7% compared with the previous month, signaling a slight improvement in housing demand.
Despite the increase, housing transactions remain below levels seen before the pandemic. Analysts say the market is still adjusting to higher home prices, mortgage rates, and limited housing supply.
Even so, improving affordability and slightly lower borrowing costs have begun to encourage some buyers to return to the market.
Existing Home Sales Show Modest Growth
In February, existing home sales reached a seasonally adjusted annual rate of 4.09 million transactions, representing a small increase from January levels.
However, compared with the same month last year, sales were down by 1.4%, highlighting that the housing market continues to operate below its typical pace.
For perspective, home sales during the pandemic boom often exceeded 6 million homes per year, while normal annual activity before the pandemic was usually above 5 million transactions.
Today’s figures show that the housing market has not fully recovered to those earlier levels.
Regional Sales Trends
Housing activity varied across different parts of the country.
Month-over-month sales increased in:
- Midwest
- South
- West
However, sales declined in the Northeast during the same period.
On a yearly basis, the regional picture also differed:
- South: Sales increased compared with last year
- Northeast, Midwest, and West: Sales declined year-over-year
These differences highlight how local market conditions, home prices, and inventory levels continue to shape housing demand across regions.
Housing Affordability Shows Improvement
One positive signal from the report is continued improvement in housing affordability.
The Housing Affordability Index rose to 117.6 in February, up from 117.1 in January and significantly higher than 103.1 a year ago.
This marks the eighth consecutive month of improving affordability, reaching the highest level since early 2022.
Housing affordability improves when household incomes rise faster than housing costs or when mortgage rates decline.
Recently, wage growth has been outpacing home price growth, which has helped some buyers qualify for mortgages more easily.
Mortgage Rates Lower Than Last Year
Mortgage rates also played a role in improving affordability.
During February, the average rate for a 30-year fixed mortgage was about 6.05%, slightly lower than 6.10% in January and significantly below the 6.84% rate recorded one year earlier.
Although mortgage rates remain higher than the historically low levels seen earlier in the decade, the gradual decline has helped reduce monthly borrowing costs for some buyers.
Even small changes in mortgage rates can have a meaningful impact on monthly payments and overall home affordability.
Housing Inventory Is Slowly Increasing
Another important factor influencing home sales is housing supply.
In February, total housing inventory increased to 1.29 million homes, which represents:
- 2.4% growth compared with January
- 4.9% increase compared with February 2025
Despite this improvement, housing inventory remains relatively limited.
At the current pace of sales, the market has about a 3.8-month supply of homes, slightly higher than the 3.6-month supply recorded last year.
A balanced housing market typically has about five to six months of supply, meaning inventory still remains below historical norms.
Home Prices Continue to Rise
Home prices also showed modest growth in February.
The median existing home price reached $398,000, representing a 0.3% increase compared with February 2025.
Although price growth has slowed compared with the rapid increases seen during the pandemic housing boom, prices have continued rising for 32 consecutive months on a yearly basis.
For many buyers, these elevated home prices remain one of the biggest barriers to entering the housing market.
Analysts Say Demand Remains Limited
Housing economists say the modest sales increase is encouraging but still reflects relatively weak housing demand.
Some buyers remain hesitant to enter the market due to concerns about job stability, economic uncertainty, and overall housing affordability.
Even though mortgage rates have declined somewhat, the lock-in effect continues to limit housing activity. Many homeowners who secured very low mortgage rates in previous years are reluctant to sell their homes and take on new loans with higher rates.
This limits the number of homes available for sale and reduces overall market activity.
Inventory Still a Key Factor for the Housing Market
Many analysts agree that housing supply remains one of the most important factors shaping the market.
When inventory is limited, competition among buyers increases, which can push home prices higher.
If mortgage rates fall significantly without a corresponding increase in supply, demand could rise faster than available housing inventory.
In that situation, home prices could climb again due to increased competition among buyers.
Because of this dynamic, housing experts say increasing the supply of homes is critical for improving affordability and supporting long-term housing market stability.
Outlook for the Spring Housing Market
The outlook for the upcoming spring homebuying season remains uncertain.
While there is pent-up demand from buyers who have been waiting for better conditions, several factors could influence market activity.
Economic uncertainty, job market trends, and global developments may affect consumer confidence and borrowing costs.
If mortgage rates remain stable and housing supply increases, home sales could gradually improve throughout the year.
However, if economic uncertainty continues or mortgage rates rise again, housing activity could remain relatively slow compared with historical levels.
What the Report Means for Buyers and Sellers
For homebuyers, the current market presents both opportunities and challenges.
Slightly improved affordability and growing inventory may provide more options than in previous years.
However, elevated home prices and limited housing supply continue to make purchasing a home difficult for many households, especially first-time buyers.
For sellers, the market remains relatively stable, but fewer buyers and slower demand mean pricing homes realistically is more important than ever.
As the housing market moves through 2026, trends in mortgage rates, inventory growth, and economic conditions will continue shaping home sales across the country. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.