Sales of previously owned homes in the U.S. unexpectedly increased in February as record foreclosures pushed down prices and lured first-time buyers into the market.
Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.
Economists forecast resales would fall to a 4.45 million annual rate, according to the median of 65 projections in a Bloomberg News survey. Estimates ranged from 4.26 million to 4.75 million. Sales were down 4.6 percent compared with a year earlier.
First-time buyers accounted for about half of all sales last month, led by growing demand for lower-priced properties, said the realtors group’s chief economist Lawrence Yun. That’s contributing to the drop in values, he said.
The median price of an existing home decreased to $165,400 from $195,800 in February a year earlier, the group said.
Lower prices have drummed up enough demand in some of the most distressed areas of the country to allow values to stabilize. In California, median listing prices rose last month for the first time in three years, Yun said.
“Part of the market-clearing process is that distressed properties must be sold, so the fact that this is occurring is good,” Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc., a New York forecasting firm, said in a note to clients. “Still, it certainly depresses prices, and there are plenty more foreclosed — or soon to be foreclosed — homes in the pipeline.” He said values will therefore keep falling.
The number of unsold homes on the market at the end of February represented 9.7 months’ worth at the current sales pace, the same as in January. The group has said a five to six months supply is usually consistent with a balanced market.
Resales of single-family homes increased 4.4 percent to an annual rate of 4.23 million. Sales of condos and co-ops climbed 11.4 percent to a 490,000 rate.
All four regions showed an increase in sales last month, led by a 15.6 percent gain in the Northeast.
From the AP:
Sales of previously occupied homes jumped unexpectedly in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.
Prices, however, are expected to keep falling well into the year. Tens of thousands of homes reman tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.
“The four-letter word in the housing market is ‘jobs,'” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “If you’re worried about having a job tomorrow, you’re not likely to buy a home now.”
The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.
The median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record and prices are now off 28 percent from their peak in July 2006.