Existing home sales surge 14.5% in February

The National Association of Realtors said that existing home sales rose by 14.5% last month from January to a seasonally adjusted annual rate of 4.58 million. It's the strongest sales pace since September, and it's higher than the 4.2 million economists were expecting, according to FactSet.

The surge in sales ended a 12 month decline that led to the nation's worst housing slump in nearly a decade as mortgage rates surged after a series of interest rate increases by the Federal Reserve last year. Sales are down 22.6% compared to February last year.

Lawrence Yun, the NAR's chief economist, said that home buyers are taking advantage of any rate declines because of the changing mortgage rates. We are seeing stronger sales gains in areas where home prices are decreasing and local economies are adding jobs. The median home price fell 0.2% from February last year to $363,000, the NAR said.

The inventory of homes on the market was unchanged from January, but rose 15.3% from February last year. There were 980,000 homes on the market by the end of the month. That is a 2.6 month supply at the current sales pace. There is a 5 to 6 month supply in a more balanced market between buyers and sellers.

The average long-term rate on a 30 year mortgage reached a two-decade high of 7.08% in the fall. Rates fell in December and January and began to creep up in February.

The average mortgage rate fell to 6.60% last week, according to mortgage buyer Freddie Mac. The rate was 4.16% a year ago. Higher rates can add up to hundreds of dollars a month in costs for homebuyers, on top of already high home prices.