Confirmed: Existing Home Sales Drop (Again), Inventory Surging

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And there’s our confirmation that the NAR got sloppy with its press releases.

The tireless boosters of homeownership have confirmed that existing home sales are still pretty unimpressive.

The key numbers:

  • The annualized pace of sales came in at 5.02 million, below the 5.05 million (and basically right on estimates).
  • Inventory surged 9.5%.

Here’s the full announcement:

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Existing-home sales declined slightly in February, with modest gains in the Northeast and Midwest offset by softer sales in the South and West, according to the National Association of Realtors®.

Existing-home 1, which are finalised transactions that include single-family, townhomes, condominiums and co-ops, slipped 0.6 per cent nationally to a seasonally adjusted annual rate of 5.02 million units in February from 5.05 million in January, but are 7.0 per cent higher than the 4.69 million-unit pace in February 2009.

Lawrence Yun, NAR chief economist, said widespread winter storms in February may mask underlying demand. “Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said.

“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.”

Total housing inventory at the end of February rose 9.5 per cent to 3.59 million existing homes available for sale, which represents an 8.6-month supply2 at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 per cent below a year ago.

“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 stabilisation.”

The national median existing-home price3 for all housing types was $165,100 in February, which is 1.8 per cent below February 2009. Distressed homes, generally sold at discount, accounted for 35 per cent of sales last month.

A parallel NAR practitioner survey4 shows first-time buyers purchased 42 per cent of homes in February, up from 40 per cent in January. Investors accounted for 19 per cent of transactions in February, compared with 17 per cent in January; the remaining sales were to repeat buyers.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said some buyers are just beginning to realise the urgency of acting before the contract deadline for the tax credit. “If home buyers want this tax credit there is literally no time to waste,” she said.

“Most buyers spend several months looking at a dozen homes before they make a contract offer, but less than six weeks are left before the April 30 contract deadline. If you’re sure about the kind of home you want and the neighbourhood where you’d like to live, you need to begin working with a Realtor┬« now to help you find what you want, negotiate on your behalf and ensure that you meet the necessary deadlines, including loan qualification,” Golder said.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.99 per cent in February from 5.03 per cent in January; the rate was 5.13 per cent in February 2009.

Single-family home sales declined 1.4 per cent to a seasonally adjusted annual rate of 4.37 million in February from a pace of 4.43 million in January, but are 4.3 per cent higher than the 4.19 million level a year ago. The median existing single-family home price was $164,300 in February, down 2.1 per cent from February 2009.

Existing condominium and co-op sales rose 4.8 per cent to a seasonally adjusted annual rate of 650,000 in February from 620,000 in January, and are 30.3 per cent above the 499,000-unit pace in February 2009. The median existing condo price5 was $170,200 in February, down 0.2 per cent from a year ago.

Regionally, existing-home sales in the Northeast rose 2.4 per cent to an annual pace of 840,000 in February and are 12.0 per cent above a year ago. The median price in the Northeast was $254,700, up 7.5 per cent from February 2009.

Existing-home sales in the Midwest increased 2.8 per cent in February to a level of 1.11 million and are 8.8 per cent higher than February 2009. The median price in the Midwest was $128,000, which is 2.0 per cent below a year ago.

In the South, existing-home sales slipped 1.1 per cent to an annual pace of 1.85 million in February but are 6.9 per cent above a year ago. The median price in the South was $139,600, down 4.2 per cent from February 2009.

Existing-home sales in the West fell 4.7 per cent to an annual rate of 1.22 million in February but are 3.4 per cent higher than February 2009. The median price in the West was $207,900, down 9.8 per cent from a year ago.

“A lack of affordable housing inventory is holding back sales and pressuring prices to be bid upwards in many California markets,” Yun noted.

The National Association of Realtors┬«, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

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