Existing-Home Sales Hit 4.72M Pace in February

Existing-home sales increased in February, reversing losses in January, according to a ""new report"":http://www.realtor.org/press_room/news_releases/2009/03/february_existing_home_salesxLID=RONav0021 released on Monday by the ""National Association of Realtors"":http://www.realtor.org (NAR). Even so, NAR said, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect.
NAR reported that overall, existing-home sales - including single-family, townhomes, condominiums and co-ops - rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February. That figure is up from a pace of 4.49 million units in January, but is still 4.6 percent below the 4.95 million-unit level in February 2008. Though seasonal adjustment factors are more volatile in winter months, NAR said sales rates over the past few months indicate dampened activity.
According to Lawrence Yun, NAR's chief economist, first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges and distressed properties. ""Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,"" Yun said. ""Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.""
Based on NAR's market data, on a national scale, the median existing-home price for all housing types was $165,400 in February, down 15.5 percent from a year ago when the median was $195,800 and conditions were close to normal, NAR said.
Yun explained, ""Given the downward distortion in price comparisons due to distressed sales, it’s important for owners to keep in mind that this doesn’t equate to a similar loss of value for traditional homes in good condition."" Yun noted that the median listing price in California is beginning to rise for the first time in three years, perhaps signaling a stronger, quicker recovery in the West than has been expected.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said that shopping activity for homes has picked up since housing affordability has reached a record high. ""The number of buyers looking for homes rose 5 percent in February, and also was 5 percent above a year ago,"" McMillan said. ""It appears most of the increase in buyer traffic occurred in the latter part of the month after the $8,000 first-time buyer tax credit was put in place."" McMillan noted that more potential buyers are learning about the tax credit, just as the traditional spring home-buying season begins.
At the same time, McMillan said, mortgage purchase applications have risen. All of these factors should lead to a pick-up in sales by late spring, McMillan said.
Total housing inventory at the end of February rose 5.2 percent to 3.80 million existing homes available for sale, which represents a 9.7-month supply at the current sales pace, unchanged from January. In the six months prior to February, the total number of homes for sale had steadily declined from a record level last July.
Regionally, existing-home sales in the Northeast jumped 15.6 percent to an annual pace of 740,000 in February, but are 14.9 percent below February 2008. The median price in the Northeast was $251,200, down 4.8 percent from a year ago.
Existing-home sales in the Midwest increased 1.0 percent in February to a pace of 1.04 million but are still 14.0 percent lower than last year. The median price in the Midwest was $131,000, an annual decline of 7.8 percent.
In the South, existing-home sales rose 6.1 percent to an annual pace of 1.74 million in February but are 11.2 percent below February 2008. The median price in the South was $146,700, down 10.0 percent from last year.
Existing-home sales in the West increased 2.6 percent to an annual rate of 1.20 million in February and remain 30.4 percent higher than a year ago. The median price in the West was $204,600, which is 30.3 percent below February 2008.