(NewsNation) — After declining for 12 months straight, sales of previously occupied homes reversed course, surging 14.5% in February, according to new data from the National Association of Realtors (NAR). It’s a turnaround that shows just how responsive buyer demand is to fluctuating mortgage rates, experts say.

“It really indicates the level of pent up demand for housing and how eager buyers are for any win in affordability,” said Hannah Jones, an economic data analyst with Realtor.com.

In January, mortgage rates fell to their lowest level in four months and recent numbers suggest many home buyers jumped at the opportunity. Existing home sales rose from an annual rate of 4 million in January to 4.58 million in February, NAR found.

Last month’s uptick was the largest monthly increase since July 2020, but sales were well below the 5.9 million annual rate in February 2022. It’s a sign the housing market, which has cooled over the past year amid high inflation and rising interest rates, still has eager buyers.

That demand is partially due to low supply, which continues to challenge prospective homeowners. February’s inventory level was up slightly compared to the year before, but still sits near historic lows.

“Inventory growth is so sluggish that buyers are still kind of competing out there for whatever is being listed,” said Orphe Divounguy, a senior economist at Zillow.

After a post-pandemic boom, home sales have slowed but Divounguy said today’s housing market is still seeing demand that’s above normal. At the same time, new listings are down 22% compared to last year.

The good news for buyers is that prices have dropped from all-time highs over the summer.

Last month, the median existing-home sales price was $363,000 — down from a record $413,800 in June and a 0.2% decrease from February 2022, according to NAR. That’s the first year-over-year price drop in over a decade, but still more than 20% higher than the median sales price in 2020.

“Sellers are still in a really great position with record-high home equity,” Jones said. “Even bringing prices down a little bit there, they still stand to make a lot of money on a home sale.”

It remains to be seen whether last month’s bounce back is a sign of more sales to come or if mortgage rates, which went up in February, will send buyers to the sidelines.

For those who are looking to buy in the months ahead, Divounguy recommends getting pre-approved for a mortgage and working with an agent in order to compete in the market.

Spring tends to be an active season for home sales and real estate activity in the coming months could serve as a bellwether for the broader economy. Most economists expect a recession in the U.S. this year, according to a recent survey.

As the Federal Reserve continues to raise interest rates and multiple banks face financial turmoil, all eyes will be on the housing market where both dynamics could have a significant effect.