February sales – completed transactions – were down 0.9 percent from January to a seasonally adjusted annual rate of 4.59 million. January’s total was revised up to 4.63 million from 4.57 million. The February 2012 sales pace was up 8.8 percent from February 2011.
The median price of an existing home in February was $156,600, up 0.1 percent from the previous month and up 0.3 percent from February 2011. The month-over-month price increase was the first since last June. After appearing to stabilize at low levels in the first half of 2011, prices are dipping again.
The slip in sales came despite an increase in the pending home sales index which as improved 9.5 percent in the last quarter of 2011and another 2 percent in January while homes sales have not improved at the same pace.
According to the NAR, distressed homes – foreclosures and short sales sold at deep discounts – accounted for 34 percent of February sales (20 percent were foreclosures and 14 percent were short sales), down from 35 percent in January and 39 percent in February 2011.
Total housing inventory at the end of February rose 4.3 percent to 2.43 million existing homes available for sale, a 6.4-month supply at the current sales pace, up from a 6.0-month supply in January, but down from an 8.6-month supply a year ago and still well below the July 2010 cyclical peak of 12.4 which had been the highest level since 1982. Inventories are 19.3 below their year ago level. Anecdotal evidence though suggests there is still a large “shadow” inventory of homes available for sale, especially bank-owned properties.
Although inventories seem to have declined to close to their “normal” level, the large number of distressed properties combined with a substantial shadow inventory of unsold homes continues downward pressure on home prices. Though the data seems to imply that there is a relative balance between buyers and sellers, the level distressed properties remains a stumbling block.
Regionally, existing-home sales fell in February in the Northeast and the West, 20,000 and 40,000 (seasonally adjusted annual rate) respectively, while improving in the Midwest (10,000) and South (10,000). The sales pace in all four regions though is ahead of the pace a year ago.
The median price of an existing home rose in three of the four regions month-month, falling only in the Midwest. Prices are down year-over-year in the Northeast and Midwest, but up year-over-year in the South and West, according to NAR data.
“The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” offered Lawrence Yun, the NAR’s chief economist. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”
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