Sales of previously owned U.S. homes dropped more than forecast in February, sending prices to the lowest level since 2002 and indicating the market is struggling to recover.
Purchases decreased 9.6 percent to a 4.88 million annual rate, less than the 5.13 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price fell 5.2 percent from a year earlier.
Foreclosures are adding to a glut of distressed properties on the market and pressuring values, leaving some Americans with bigger mortgages than their homes are worth as joblessness hovers near 9 percent. The figures underscore the Federal Reserve’s view that the housing market “continues to be depressed” even as the rest of the economy improves.
“The demand for housing just isn’t there,” said Mark Vitner, senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina. “We have to clear this inventory of foreclosures. We think that happens in the second half of the year.”
Estimates of the 76 economists surveyed by Bloomberg ranged from 4.8 million to 5.39 million.
“One cannot say that we are in a recovery right now,” Lawrence Yun, chief economist at the Realtors’ association, said at a press conference. “If the price decline persists, even with job recovery, it could hamper some buying enthusiasm.”
From the Huffington Post:
Sales of previously owned U.S. homes fell sharply in February, after several months of increases, according to a report released Monday, in an another blow to a sagging housing market that may have further to fall.
Existing home sales dropped 9.6 percent from January to February to an annual rate of 4.88 million units, according to the National Association of Realtors, an industry group. Compared with the same period last year, sales fell 2.8 percent. Home prices fell to their lowest in nearly nine years.
Although economists expected a decline from January’s annual rate of 5.36 million units sold — economists polled by Reuters expected February sales to fall 4.0 percent — the steepness of the drop came as a surprise. The last several months of housing market data from NAR showed glimmers of recovery, but many analysts now feel that the downward trend is clearly reasserting itself.
“Expectations had looked for a decline, but a much more modest decline than what we saw,” said Miller Tabak economist Dan Greenhaus. “I think what we’re seeing is a complete and total reversal of any strength we saw as a result of the first time homebuyers credit.”
Home prices have fallen 31 percent since peaking in 2006, according to the Case-Shiller 20-city index released in February. (For the past several months, Case-Shiller has indicated that home values are dwindling in nearly every American market.) Last year, nearly 2.9 million homes received foreclosure notices — a 2 percent increase from 2009 — according to data collected by RealtyTrac, an online foreclosure market. More than a quarter of all U.S. home sales last year were of foreclosed properties.
“This decline basically wiped out about half of the gains in home sales that were made in the previous 3 months,” said Celia Chen, an economist at Moody’s Analytics.
Sales of existing homes fell in February after three straight monthly increases, an industry group said Monday.
According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, down 9.6% from January and 2.8% lower than February 2010 sales.
The report was worse than economists had expected. A consensus of experts surveyed by Briefing.com had forecast an annualized sales rate of 5.05 million.
At the same time, the median home price declined 5.2% compared to the previous year, to $156,100.