The National Association of Realtors reports that existing home sales rose in February as buyers took advantage of improved affordability. Home resales rose 5.1% over January’s pace with the number of sales climbing in February to 4.72 million from January’s unrevised 4.49 million.
About 45% of the February sales were distressed transactions from foreclosures or short sales which accounts for the further drop in home prices year over year. The median price for an existing home fell last month to $165,400 in February which is down 15.5% from $195,800 in February 2008.
The good news is the median price from January to February was slightly up from $164,800 in January to $165,400 in February. This is a good sign, but to early to call a pattern.
The inventory supply remained steady at a 9.7-month supply at the current sales pace. Sales were up but inventory of resale homes on the market also rose 5.2% at the end of February to 3.8 million available for sale.
February sales of existing homes exceeded the expectations of Wall Street with sales of 4.72 million outstripping an expected 4.48 million. The 5.1% increase was the largest monthly gain since July of 2003.
"This is a rebound from January," said NAR economist Lawrence Yun. "Home sales are still very soft." Mr. Yun added that Realtors hope the Obama administration's economic stimulus helps the market in the next few months.
Tight credit and unemployment continue to plague a housing recovery and the high percentage of distressed sales to overall numbers is a blow to new home sales that can’t compete with low foreclosure prices. Without a healthy new home industry the overall housing sector will continue to weaken.Regionally, sales rose 15.6% in the Northeast, 1% in the Midwest, 6.1% in the South and 2.6% in the West.