Before the spring season even kicked off, home sales were already climbing.

According to the National Association of Realtors (NAR), existing-home sales rose by 4.2% from January to February, reaching an annualized pace of 4.26 million units. That’s the biggest monthly jump in a year, despite mortgage rates hovering in the mid-6 percent range as of April 1.

If this early-season activity is any indication, agents should be preparing for a busy spring. Buyer behavior is shifting, competition is evolving, and the window to help buyers get ready is open right now.

First-Time Buyers Are Reentering the Market

One standout trend is the return of first-time buyers. They made up 31% of all home purchases in February, up from 28% in January and 26% a year ago. That’s a welcome change, especially considering NAR’s 2024 Profile of Home Buyers and Sellers showed the annual share of first-time buyers at just 24%—the lowest ever recorded.

At the same time, investor and second-home activity is trending down. These buyers, who often pay in cash, accounted for only 16% of sales in February, down from 21% a year earlier. As a result, owner-occupants are facing fewer cash competitors in today’s market.

Home Prices Keep Climbing

The median existing-home price hit $398,400 in February, a 3.8% increase compared to a year ago. NAR’s data shows that buyers are still stepping up, even with higher borrowing costs, largely due to concerns that waiting could mean even higher prices and fewer options later in the year.

Some buyers are adjusting expectations by looking at smaller homes or more affordable areas. Others are stretching their budgets now and planning to refinance later if rates drop.

Inventory Is Improving, but Still Tight

At the end of February, the total inventory of unsold homes stood at 1.24 million, which is a 5.1% increase over January and a 17% rise from a year ago. However, at the current sales pace, that represents only a 3.5-month supply. A balanced market typically needs closer to six months of inventory. You can read more in the NAR report.

The number of homes actively for sale increased by 27.5% compared with last year, marking the 16th consecutive month of annual inventory growth. However, inventory is still down 22.9% compared with typical 2017 to 2019 levels.

Current Homeowners Could Benefit, Too

Rising home prices also benefit current owners. According to NAR Chief Economist Lawrence Yun, each one percent increase in home values adds approximately $350 billion in housing wealth across the country. For sellers, that equity can open doors to a move-up home, investment property, or other goals.

What Agents Should Know

If you’re advising clients this spring, here are a few key takeaways:

• Buyers are still motivated, despite current rates. Many are moving forward to avoid future price hikes.
• Remember affordability strategies. Paid rate buydowns and “buy now, refinance later” plans are still part of the conversation.
• First-time buyers are gaining ground. This group may need extra education and support, but they’re actively participating.
• Inventory is starting to loosen. This could help ease competition in certain markets, but supply is still far from balanced.

What Homebuyers Should Know

If you’re planning to buy this spring, here are a few things to keep in mind as the market heats up:

• You may face more competition soon. February’s early sales growth could be a sign of increased buyer activity in the months ahead. Getting prepped now can give you an edge as more buyers enter the market.
• There are fewer cash buyers in the mix. Investor activity is down compared to last year, which means more financed buyers are getting offers accepted. That’s good news if you’re planning to use a mortgage.
• Your tax refund could help. If saving for upfront costs has been a hurdle, your spring tax refund might give you the boost you need to move forward sooner than expected.

If you’re buying a home or working with clients this season, now is the time to keep an eye on data and trends. Reach out to your Movement loan officer for guidance on how to navigate the housing market.