Existing-home sales fell in February following three straight monthly increases, according to data released by the National Association of Realtors (NAR) Monday.
Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums, and co-ops, dropped 9.6 percent to an annual rate of 4.88 million in February from an upwardly revised 5.40 million in January. February’s reading is 2.8 percent below the 5.02 million pace for the same period last year.
The latest figures came in much lower than analysts were expecting. Based on pending home sales data from the past few months, the research firm IHS Global Insight had forecast a 7 percent drop to a 5.0 million annual rate. Zacks Investment Research was expecting an even smaller decline to a 5.11 million annual pace.
Lawrence Yun, NAR’s chief economist says current market conditions make for an uneven recovery.
“[H]ome sales are being constrained by the twin problems of unnecessarily tight credit and a measurable level of
contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” Yun said. “This tug and pull is causing a gradual but uneven recovery.”
Still, Yun notes that existing-home sales remain 26.4 percent above the cyclical low seen last July.
NAR reports that the national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010.
Distressed homes – sold at discount – accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010.
“The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional homebuyers if mortgage credit conditions return to normal.”
All-cash sales were a record 33 percent in February, up from 32 percent in January. By comparison, they were 27 percent in February 2010.
NAR’s study shows investors accounted for 19 percent of sales activity in February, down from 23 percent in January. The balance of sales were to repeat buyers, while first-time homebuyers accounted for 34 percent of last month’s transactions.
As buyer demand weakened, total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, NAR said. That represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January.
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