Existing-Home Sales Fall Again in February: NAR

Although higher than year-ago levels, existing-home sales declined slightly from January to February, the ""National Association of Realtors"":http://www.realtor.org/ (NAR) reported Tuesday.

[IMAGE]

Existing-home sales--including single-family, townhomes, condominiums, and co-ops--slipped 0.6 percent to a seasonally-adjusted annual rate of 5.02 million units in February, down from 5.05 million units in January. Despite this month-to-month drop, sales were still 7 percent higher than the 4.69 million-unit pace recorded in February 2009.

“February's drop in sales is further payback for the first-time homebuyers' tax credit that expired on November 30,” said Gregory Daco, U.S. economist at ""IHS Global Insight."":http://www.ihsglobalinsight.com/ “This is the third consecutive month of a decrease in sales, as sales are currently down 23 percent from their November peak.”

NAR said the overall decline in sales was the result of softer sales in the South and West, which offset modest gains in the Northeast and Midwest.

Sales in the Northeast rose 2.4 percent from January, and sales in the MidWest increased 2.8 percent. Meanwhile, sales in the South dropped 1.1 percent from the previous month, and sales in the West fell 4.7 percent

Of the homes that were sold in February, first-time buyers purchased 42 percent, up from 40 percent in January;

[COLUMN_BREAK]

and investors accounted for 19 percent of transactions, up from 17 percent the previous month. The remaining sales were to repeat buyers.

Lawrence Yun, NAR chief economist, said widespread winter storms in February may mask underlying demand. He said some closings were simply postponed by winter storms, and in some areas, buyers couldn't even get out to look at homes. This, he explained, should negatively impact near-term contract activity.

""Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment,"" Yun said.

According to NAR, the national median existing-home price for all housing types was $165,100 in February, down 1.8 percent from February 2009. Prices were negatively affected by distressed homes, which are generally sold at a discount. Transactions involving distressed properties accounted for 35 percent of sales last month.

The national decrease in the median price for existing homes was expected, as only one region posted a year-over-year increase in prices. The median price in the Northeast was up 7.5 percent from February 2009. But the median price fell 2 percent in the Midwest, and it dropped 4.2 percent in the South. The most notable decline was seen in the West, though, where the median price fell 9.8 percent from a year ago.

The slump in both existing-home sales and prices caused total housing inventory at the end of February to jump 9.5 percent to 3.59 million existing homes available for sale. This represents an 8.6-month supply at the current sales pace, up from a 7.8-month supply in January.

""The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,"" Yun said. ""If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.""