While sales activity remains relatively soft, existing home sales unexpectedly rose in the month of February, according to a report released by the National Association of Realtors on Monday. Sales rebounded after hitting a twelve-year low in the previous month.
The report showed that existing home sales rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Economists had expected sales to slip to a 4.45 million unit rate.
Despite the monthly increase, however, existing home sales remained 4.6 percent below the 4.95 million unit level in February of last year.
Lawrence Yun, NAR chief economist, noted, Because entry level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February.
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, Yun added.
The report showed that the national median existing-home price for all housing types fell 15.5 percent to $165,400 in February from $195,800 in the same month a year ago, although the median price showed a modest increase sequentially.
A 15.6 percent increase in existing home sales in the Northeast contributed to overall sales growth, with sales in the South also increasing by a notable 6.1 percent.
Existing home sales in the West and Midwest showed more modest increases of 2.6 percent and 1.0 percent, respectively.
Yun said, Sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years.
The report also showed that total housing inventories at the end of February rose 5.2 percent to 3.80 million existing homes available for sale. This represents a 9.7-month supply at the current sales pace, unchanged from January.
The number of buyers looking for homes rose 5 percent in February, said NAR President Charles McMillan. 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 added, At the same time, mortgage purchase applications have risen, so we expect to see sales picking up around late spring.
Last Tuesday, the Commerce Department released a report showing that housing starts unexpectedly increased in the month of February, with the increase largely due to a jump in new construction of multi-family homes.
The report showed that housing starts rose 22 percent to an annual rate of 583,000 in February from a revised January estimate of 477,000. Economists had expected starts to fall to 450,000 from the 466,000 originally reported for the previous month.
While the unexpected monthly increase marked the biggest percentage increase sine January of 1990, housing starts remained down 47.3 percent year-over-year.
On Thursday, the Commerce Department is due to release its report on new home sales in the month of February, with economists expecting sales to edge down to an annual rate of 300,000 from a rate of 309,000 in January.
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