Home sales made a small gain to start the year, but higher mortgage rates now could throw cold water on the spring season.

Existing home sales in February rose 1.7% from January to a seasonally adjusted, annualized rate of 4.09 million units, according to the National Association of Realtors. Sales were down 1.4% from February of last year.

This count represents closed sales, so deals were likely inked in December and January, when mortgage rates fell a bit and stayed solidly in a low range near 6% on the 30-year-fixed mortgage. Rates were about a full percentage point higher the year before.

“Despite the modest gain in home sales, actual housing demand remains muted relative to wage growth and job gains,” Lawrence Yun, chief economist for the Realtors, said in a release. “Wage growth is now outpacing home price growth by almost four percentage points. Mortgage rates are also measurably lower compared to a year ago.”

Yun also noted that there are over 6 million more jobs now than there were in 2019, yet home sales per year are down by 1 million.

Lower mortgage rates helped improve affordability slightly, but low inventory is still a significant headwind. There were 1.29 million units for sale at the end of February, an increase of 2.4% from January and 4.9% from February 2025. At the current sales pace, that is a 3.8-month supply, unchanged from January. A six-month supply is considered a balanced market between buyer and seller.

More sellers who delisted their homes last fall, due to slower sales and weak consumer confidence, are relisting their homes now, according to Redfin, a real estate brokerage. Nearly 45,000 homes that were delisted last year were relisted for sale in January. That is the highest January figure since Redfin began tracking this metric a decade ago and represents a record 3.6% of homes that were on the market in January.

“Inventory is growing, but sluggishly,” Yun said. “If demand picks up notably in the coming months and outpaces supply growth, home prices will inevitably rise. That is why increasing supply is so important to help limit home price growth, improve housing affordability, and boost transactions.”

Tight supply, however, is keeping prices just barely higher. The median price of a home sold in February was $398,000, an increase of 0.3% year over year. Sales continue to be strongest in the highest price category, properties listed at $1 million or above. Sales were down sharply on the lowest end of the market.

It continues to take longer to sell a home, at 47 days, up from 42 days one year ago. First-time buyers represented 34% of total sales, an increase from 31% a year ago. Investors made up 16% of sales, unchanged from a year ago.