February’s month-over-month existing home sales surge of 9.5% ranked as the largest jump in a year, according to new data from the National Association of Realtors (NAR).

February’s seasonally adjusted annual resale rate of 4.38 million units is the fastest pace since February 2023, per the NAR’s figures.

Sales still fell on an annual basis, but the uptick nonetheless gave some real estate industry observers hope that the combination of growing supply and evolving consumer psychology could buttress the spring buying season. The sales spike shattered expectations, as a Reuters poll of experts had forecast a sales rate of 3.94 million units.

Total housing inventory stood at 1.07 million units at the close of February, up 5.9% monthly and 10.3% annually as both buyers and sellers adjust to the new status quo of rates. Even with the Federal Reserve still opting against decrease its benchmark rate of late and mortgage rates inching upward to near 7% in March, the decline of mortgage rates from their October peak close to 8% has helped convince homeowners to sell and pry buyers from the sidelines.

Unsold inventory is at a supply of 2.9 months at the current sales pace, down from 3.0 months in January, but up from 2.6 months in February 2023.

“Additional housing supply is helping to satisfy market demand,” said NAR Chief Economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”

Affordability does remain a significant headwind, especially with the median existing home sale price up to $384,500, up 5.7% year over year. High prices and elevated rates are still holding back first-time buyers, who accounted for just 26% of February sales. That’s down from 28% in January and 27% in February.

The recent upturn in mortgage rates bears watching, not just for first-time homebuyers but for the greater residential market as a whole. Mortgage purchase applications, as tracked by the Mortgage Bankers Association, have trended downward over the past several weeks, suggesting that buyers are retreating again. Wells Fargo economists Charlie Dougherty and Patrick Barley described February sales as “unlikely to be sustained in the near-term”; time will tell if February’s swell ultimately registers as a harbinger of surprising spring strength or merely a temporary rebound until the rate environment improves more fully.