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Home Sales Pick Up, Prices Dip Deeper

Existing home sales up in February for first time in seven months

March 24, 2008

Lawrence Yun, NAR chief economist, said the gain is encouraging.

"We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," he said. "Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year."

The national median existing-home price for all housing types was $195,900 in February, down 8.2 percent from a year earlier when the median was $213,500. The Realtors group attributed much of the value drop to the slowdown in sales in high-cost markets. More sales in lower-priced markets pulled the average down, it said.

The most recent data shows roughly half of the metro areas in the U.S. with price increases, with healthy gains in markets such as Oklahoma City and Trenton, N.J. Where prices are actually falling, the NAR says a pickup in sales should follow.

"In other areas such as Sacramento, a rapid price decline has induced buyers to come into the market and sales are now rising," Yun said. "The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.92 percent in February from 5.76 percent in January; the rate was 6.29 percent in February 2007. NAR President Richard F. Gaylord said that negotiation and knowledge are even more important in the current market.

"Consumers need to be aware of local market conditions and comparable sales prices to have a clear picture of a home's value," he said.

The group says total housing inventory fell 3.0 percent at the end of February to 4.03 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.2-month supply in January.

Single-family home sales increased 2.8 percent to a seasonally adjusted annual rate of 4.47 million in February from an upwardly revised 4.35 million in January, but are 22.9 percent below 5.80 million-unit level a year ago. The median existing single-family home price was $193,900 in February, down 8.7 percent from February 2007.

Existing condominium and co-op sales rose 3.7 percent to a seasonally adjusted annual rate of 560,000 units in February from a downwardly revised 540,000 in January, and are 29.7 percent below the 797,000-unit pace in February 2007. The median existing condo price (4) was $211,700 in February, which is 4.9 percent lower than a year ago.

Regionally, existing-home sales in the Northeast jumped 11.3 percent to an annual pace of 890,000 in February, but are 26.4 percent below February 2007. The median price in the Northeast was $264,800, up 0.4 percent from a year ago.

Existing-home sales in the Midwest rose 2.5 percent in February to a level of 1.24 million but are 19.5 percent below a year ago. The median price in the Midwest was $143,900, which is 7.1 percent lower than February 2007.

In the South, existing-home sales increased 2.1 percent to an annual rate of 1.99 million in February but are 22.0 percent below February 2007. The median price in the South was $163,400, down 8.6 percent from a year ago.

Existing-home sales in the West slipped 1.1 percent to an annual rate of 920,000 in February, and are 29.2 percent below a year ago. The median price in the West was $290,400, down 13.4 percent from February 2007.

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