February Housing Market Update: Modest Home Price Bump Despite Buyer Hesitation

In February, U.S. home prices continued a modest upward climb despite cautious buyer behavior and increasing home inventory nationwide.

The median existing-home sale price grew 3.8% year-over-year, reaching $398,400, marking 20 consecutive months of annual price increases, according to the National Association of Realtors (NAR). Redfin data echoed this trend, reporting a similar annual price increase of 3.2% to a median sale price of $425,421 nationwide—the slowest price growth in six months.

This steady price increase came even as buyer demand faltered, impacted by elevated mortgage rates and lingering economic uncertainty. Zillow reported that the typical home value nationwide rose just 2.1% year-over-year—the slowest pace in 18 months. Zillow analysts noted that fewer bidding wars and less buyer competition translated into flattened appreciation.

Certain markets experienced outsized price gains driven by local conditions. Milwaukee saw the biggest jump, with median sale prices surging 20% year-over-year to $330,000, according to Redfin. Detroit also saw double-digit increases of 12.5%.

The Midwest, experiencing tighter inventory conditions, contrasted sharply with markets such as Austin and Tampa, where increased home construction and growing inventory have resulted in price declines of 2.7% and 1.9%, respectively, according to Redfin data.

Rising Inventory Offers Relief

One of the most significant developments in February was a sustained increase in home inventory levels across the U.S., offering relief to homebuyers after years of extremely tight supply.

Realtor.com data showed the number of actively listed homes grew by 27.5% compared to February of the previous year, marking 16 straight months of year-over-year inventory growth. Zillow confirmed this increase, reporting 15.4% more active listings nationally than a year earlier, reaching approximately 1.04 million homes, the highest number available since early 2020.

This increased inventory comes as new home listings also rose modestly in some areas. According to Zillow, February saw a 2.8% month-over-month increase in newly listed homes, although new listings were still down nearly 5% compared to last year. This indicates a mixed environment where overall inventory levels remain improved from pandemic lows, yet new sellers remain somewhat hesitant to enter the market in large numbers.

Mortgage Rates Edge Lower

Mortgage rates edged downward throughout February, bringing some relief to prospective homebuyers concerned about affordability.

Zillow reported that mortgage rates dropped by roughly a quarter of a percentage point in February and fell further in March, reaching lows not seen since December. According to Freddie Mac data cited by NAR, the average 30-year fixed-rate mortgage stood at 6.65% as of mid-March—down slightly from 6.74% a year earlier.

This modest rate relief could represent meaningful cost savings for potential buyers. But the typical monthly mortgage payment is still significantly higher compared to pre-pandemic levels, according to Zillow data.

The National Association of Home Builders (NAHB) echoed cautious optimism regarding rates but highlighted continued uncertainty. Builder confidence dropped in February due to elevated construction costs and tariff-related pressures.

A Fragmented Market

Regional variations emerged distinctly across February's housing market, highlighting how localized economic factors and housing supply can significantly alter market dynamics.

Midwest cities like Milwaukee, Detroit, and Cleveland saw robust home price appreciation amid dwindling inventory. Redfin reported inventory declines in Detroit (-6.7%), Milwaukee (-3.7%), and Cleveland (-3.6%), tightening supply and driving up prices even as national inventory levels rose.

In stark contrast, housing markets in Florida and Texas cooled noticeably, with home prices falling and inventory rising significantly. Redfin highlighted Austin, Tampa, and San Antonio among metros experiencing price declines ranging from 1.7% to 2.7%, driven by surging inventories and new home construction.

Spring Outlook

February’s housing market showed a nuanced and complex set of trends, reflecting ongoing economic uncertainty, shifting inventory patterns and cautious buyer behavior. While buyers face continuing affordability challenges, the combination of lower mortgage rates, rising inventory and slower home value appreciation offers modest improvements in housing accessibility.

As mortgage rates drift lower and inventory slowly accumulates, prospective buyers and sellers may reengage, creating opportunities within what remains an uneven, yet gradually improving market.

Buyers, sellers, and builders alike will closely monitor evolving economic factors and policy developments as the spring unfolds.