Sales of previously owned U.S. homes plunged in February and prices hit their lowest level in nearly nine years, implying a housing market recovery was still a long way off.
The National Association of Realtors said on Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.
Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January. January's pace was revised up slightly to 5.40 million.
This is a frustrating number. The U.S. residential real estate market doesn't seem to want to turn around despite better affordability, said David Carter, chief investment officer at Lenox Advisors in New York.
Financial markets largely ignored the data. U.S. stocks were up sharply in early trade, partly on news of a bid by AT&T for Deutsche Telekom AG's T-Mobile USA and growing hopes Japan would get its nuclear crisis under control.
U.S. debt prices extended losses as the U.S. Treasury said it would begin selling off $142 billion in mortgage-backed securities it had acquired to help tame the financial crisis, while the dollar rose against the yen on intervention worries.
The Realtors' group said the median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002, a sign of the relentless downward pressure on prices from a market flooded with foreclosure sales.
If the price declines persist, even with the job market recovery, that could hamper recovery in the housing market, said NAR chief economist Lawrence Yun.
A glut of homes on the market and the flood of foreclosure properties are holding back a recovery in the housing sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s.
Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month, the trade group said. All-cash purchases made up a record 33 percent of transactions in February.
Sales fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 9.6 percent. Compared with February last year, overall sales were down 2.8 percent.
At February's sales pace, the supply of existing homes on the market rose to 8.6 months' worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.
(Additional reporting by Ryan Vlastelica in New York; Editing by Andrea Ricci)