The National Association of Realtors reported that existing home sales cooled to a seasonally adjusted annual rate of 5.48 million in February. Sales of existing homes fell 3.7 from January levels but were 5.4 percent higher year-over-year. NAR continues to fret about an inventory shortage when the real culprit is elevated home prices in general. Existing home sales are still treading at levels well below the previous cycle peak.

As I have said repeatedly, there is no shortage of homes for sale. There is a shortage of affordable homes for sale, homes that real working families would like to buy and live in. The shortage of affordable homes is why the median price for an existing home rose 7.7 percent to $228,400. Median prices are still rising thanks to the Fed’s Ponzification of the housing market. As you go up the price bands, however, the prices gains continue to evaporate.

Investors are still buying up affordable inventory, and that is contributing to the bifurcated housing situation. The number of renter-occupied single-family homes and condos in the U.S has swelled from less than 11 million in 2000 to roughly 18 million. Many of these homes were purchased by investors, and that continues to artificially depress inventory, thereby pushing up median prices.

“The affordability constraints holding back renters from buying is a signal to many investors that rental demand will remain solid for the foreseeable future,” said Yun. “Investors are still making up an above average share of the market right now despite steadily rising home prices and few distressed properties on the market, and their financial wherewithal to pay in cash gives them a leg-up on the competition against first-time buyers.”

The good news is that higher interest rates have not killed existing home sales, at least not yet. The real eye opener from today’s existing home sales report is the cash from investors that is still propping up activity. Individual investors snatched up 17 percent of homes in February, and 71 percent of those investors paid cash for the homes.

You can thank the Federal Reserve for the miraculous recovery that has once again displaced millions of American families in terms of an opportunity to buy an affordable home. The Fed and government bureaucrats foamed the runway for banks and the wealthy while giving the middle finger to the middle class. That’s what the bailouts were designed for. Home prices have far exceeded wage growth in recent years, and so the stagnation (or should I say stagflation) continues. The situation is made even more comical when you consider that the Fed is now hiking rates because they are so far behind the curve…again!