Contract closings increased 4.2% to an annualized rate of 4.26 million in February, according to National Association of Realtors figures released Thursday. The figure exceeded all estimates in a Bloomberg survey of economists.

Sales climbed the most in the West and South, which were afflicted at the start of the year by destructive wildfires in Los Angeles and severe winter storms, respectively. To the extent January sales were affected by weather, NAR Chief Economist Lawrence Yun said last month that those transactions would be carried into February.

The supply of previously owned homes jumped 17% from a year ago to 1.24 million, the most for any February since 2020. Even so, the median sales price increased 3.8% from a year ago to $398,400 — a record for the month — extending a run of year-over-year price gains dating back to mid-2023.

“Home buyers are slowly entering the market,” Yun said in a statement. “Mortgage rates have not changed much, but more inventory and choices are releasing pent-up housing demand.”

The housing market entered 2025 with some momentum as home buyers and sellers have come to terms to elevated mortgage rates, freeing up inventory that has made a slight dent in prices. However, home prices are still high and housing remains unaffordable for many Americans.

Read More: US Housing Market Is Cooling Right as a Key Season Kicks Off

The contract rate on a 30-year fixed mortgage steadily declined from mid-January to early March, which spurred greater demand for home purchases, according to the Mortgage Bankers Association. However, the recent rate drop likely didn’t influence February sales, since existing homes typically go under contract a month or two before closing.

High mortgage rates discouraged many homeowners from listing their houses for sale the last couple years, because they didn’t want to give up their low rates to look for a new home with a higher one. But that so-called “lock-in effect” has been dissipating recently as people grow more accustomed to high financing costs.

Existing-home sales account for the majority of the US total and are calculated when a contract closes. The government will release figures on new-home sales on Tuesday.

Digging deeper

• Sales dipped in the Northeast and were unchanged in the Midwest
• Sales of existing single-family homes increased to the fastest pace in a year, while sales of existing condominiums fell almost 10% in February
• Properties remained on the market for 42 days on average last month, compared with 41 days in January
• Last month, half of homes were on the market for less than a month, compared with 47% in January, while 21% sold for above the list price
• Individual investors or second-home buyers purchased 16% of homes, compared with 17% in January. All-cash transactions accounted for 32% of sales
• First-time buyers accounted for 31% of purchases
• On an unadjusted basis, sales fell 5.2% from a year earlier, which was a leap year with one extra business day