Existing-Home Sales Up in February; Inventory Rises from Prior Month

Existing-home sales rose 0.8 percent in February to a seasonally adjusted annual rate of 4.98 million, the National Association of Realtors reported (NAR) Thursday. Economists had expected the sales pace to climb to 5.01 million from January’s originally reported 4.92 million. January sales were revised up to 4.94 million.

The median price of an existing single-family home rose to $173,600 in February as the median price in January was revised down to $170,600.

The inventory of homes for sale rose for the first time since last July, up 9.6 percent to 1,940,000. At the reported sales pace, that represents a 4.7-month supply of homes for sale, up from the 4.3-month supply reported for January.

The month-over-month increase in sales was the eighth in the last 12 months. February sales were 10.2 percent ahead of the pace one year ago.

The report on existing-home sales tracked NAR’s Pending Home Sales Index (PHSI) which fell in December to its lowest level since June. The PHSI, however, bounced back in January to its highest level since April 2010.

Weak prices continue to contribute to the reluctance of homeowners to list their homes. The median price of an existing single-family home averaged $176,500 over the last six months, down from $180,000 in the previous six months (which included the summer months, typically a stronger sales period). Listed inventory, according to theNAR, is 19.2 percent below a year ago, when there was a 6.4-month supply.

Sales continue to be plagued by weak inventory. The inventory of homes for sale has averaged 2,189,000 for the last 12 months, down from 2,832,000 for the previous 12 months.

Though the February median price was up 11.6 percent from a year ago, the median price of an existing single-family home has fallen for five of the last eight months. The median price is down 24.6 percent from the July 2006 peak of $230,300 and is off 8.1 percent from the 2012 peak of $188,800 in June.

Distressed homes—foreclosures and short sales—accounted for 25 percent of February sales, up from 23 percent in January but down from 34 percent in February 2012. Fifteen percent of February sales were foreclosures, and 10 percent were short sales compared with January, when 14 percent of sales were foreclosures and nine percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in February, while short sales were discounted 15 percent. In January, foreclosures sold for an average discount of 20 percent, while short sales were discounted 12 percent.

Unlike the government report on new home sales which tracks contracts, the NAR report is based on closings, which means this report (though labeled “February”) actually reflects economic conditions in December, when contracts were signed amidst uncertainty that “fiscal cliff” negotiations would affect the mortgage interest tax deductions and other homeownership incentives.

The median time on market for all homes was 74 days in February, 24 percent below 97 days in February 2012, the NAR said. Short sales were on the market for a median of 101 days, while foreclosures typically sold in 52 days and non-distressed homes took 77 days. One out of three homes sold in February was on the market for less than a month.

First-time buyers, according to the NAR, accounted for 30 percent of purchases in February, unchanged from January; they were 32 percent in February 2012.

Regionally, existing-home sales in the Northeast fell 3.1 percent to an annual rate of 630,000 in February, 8.6 percent above February 2012. The median price in the Northeast was $238,800, 7.6 percent above a year ago and up 5.6 percent from January.

Existing-home sales in the Midwest slipped 1.7 percent in February to a pace of 1.14 million, 12.9 percent above a year ago. The median price in the Midwest was $129,900, up 7.7 percent from February 2012 but down 1.1 percent from January.

In the South, existing-home sales increased 2.6 percent to 2.01 million in February, 14.9 percent above February 2012. The median price in the South was $150,500, up 9.3 percent from a year ago and up 2.0 percent from January.

Existing-home sales in the West rose 2.6 percent to 1.2 million in February, 1.7 percent above a year ago. The median price in the West rose to $237,700, 22.7 percent above February 2012, but off 0.4 percent from January.

By: Mark Lieberman, Five Star Institute Economist, on DSNews