While the U.S. housing market has made numerous gains over the past year, buyers in many regions across the country are still being tested by fluctuating conditions, limited inventory and severe winter weather.
According to Redfin's recent Real Estate Report, home prices in February ticked up 13 percent, while sales declined 10.3 percent. A lack of affordability has pinched some potential buyers out of the market, even as low inventory numbers take a turn for the better.
"It's likely that many people are doing a double-take when they calculate mortgage payments on homes they are considering buying," said Ellen Haberle, Redfin economist. "Home sales in the coming months will be a test of buyers' tolerance when it comes to changing affordability, particularly for first-timers."
On a regional basis, the West Coast saw sales drop to their lowest point in five years, Redfin reported. February figures declined 13.4 percent year-over-year, led by Las Vegas, which was down 22.7 percent, and Sacramento, down 21.8 percent. These trends nationwide are expected to continue once March sales totals are released. The number of new customers in the real estate market is increasing at a slower trend than last year, further representing a lack of inventory and a hesitancy about home prices.
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Consumer sentiment wanes
In addition to fewer home sales and other struggling statistics, Fannie Mae reported that consumer sentiment has become increasingly volatile surrounding home price expectations and lending standards.
Doug Duncan, senior vice president and chief economist at Fannie Mae, noted that winter weather may still be playing a role in the housing market's recent struggles. He explained that consumers are seeing an increase in monthly expenses, such as home heating costs. And while the recovery should continue, the next few months may not be as strong as they could be.