At the end of February, 1.89 million existing homes were available for sale on the market, a 4.6-month supply at the current sales pace. Inventory was down 0.5 percent below last year. This shortage of housing stock helped to drive price growth to its fastest pace in a year. In February, the median existing-home price reached $202,600, a climb of 7.5 percent from last year. For the 36th month in a row, home prices have increased year-over-year. What's more, every region of the country saw an increase in home prices. Median prices in the Northeast and West were up 3.3 percent and 4.2 percent from last year's prices. In the South, prices climbed 8.5 percent above February 2014. The Midwest saw the biggest gains, with home prices 8.8 percent higher than a year ago.

Rising Home Prices Will Affect Renters
A lack of inventory can negatively affect home sales, as can higher home prices. Homeowners benefit from the growth in housing prices, since higher prices lead to more home equity. But the more prices climb, the more difficult it is for new buyers to find a home they can afford. Income growth has not kept pace with typical rent rates; over the past five years, rents climbed 15 percent, but the average income of renters rose only 11 percent. With rents continuing to climb in some areas of the country, the gap is expected to widen to unsustainable levels, which will make it more difficult for renters to transition to homeowners. Fortunately mortgage rates remain near 2015 lows. For the week ending April 16, the 30-year fixed-rate mortgage (FRM) averaged 3.66 percent. Last year, the 30-year FRM averaged 4.27 percent.

National Home Sales Increase
Nationally, existing-home sales increased 1.2 percent in February. Sales climbed 4.7 percent higher than a year ago, marking the fifth consecutive month sales have risen above year-over-year totals. The Northeast was the only region of the country to see existing-home sales drop month-to-month, by 6.5 percent; sales were still 3.6 percent higher than a year earlier. In the Midwest, sales were stagnant from January but 4.9 percent above last year's sales. The South and the West, meanwhile, reported only gains. From January to February, existing-home sales were up 1.9 percent in the South and 5.7 percent in the West. Compared with a year ago, sales in the South and the West climbed 6.0 percent and 2.8 percent, respectively.