Sales of existing homes increased in February and remain within a fairly stable range, according to the National Association of Realtors.
Existing-home sales—including single-family, townhomes, condominiums and co-ops—rose 2.9% to a seasonally adjusted annual rate(1) of 5.03 million units in February from a pace of 4.89 million in January, but remain 23.8% below the 6.60 million-unit level in February 2007. The sales pace has been in a fairly narrow range since last September.
Lawrence Yun, NAR chief economist, says the gain is encouraging. "We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," he said. "Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year."
The national median existing-home price(2) for all housing types was $195,900 in February, down 8.2% from a year earlier when the median was $213,500. Because the slowdown in sales from a year ago is greater in high-cost areas, there is a downward pull to the national median with relatively fewer sales in higher priced markets.
Home prices within metropolitan areas are more telling. The most recent data shows roughly half of the metro areas in the U.S. with price increases, with healthy gains in markets such as Oklahoma City and Trenton, N.J. "In other areas such as Sacramento, a rapid price decline has induced buyers to come into the market and sales are now rising," Yun says. "The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.92% in February from 5.76% in January; the rate was 6.29% in February 2007.
NAR President Richard F. Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif., said that negotiation and knowledge are even more important in the current market. "Consumers need to be aware of local market conditions and comparable sales prices to have a clear picture of a home's value," he said. "Realtors understanding of local markets, negotiating expertise and transaction experience are invaluable to both buyers and sellers, today as much as ever."
Total housing inventory fell 3 % at the end of February to 4.03 million existing homes available for sale, which represents a 9.6-month supply(3) at the current sales pace, down from a 10.2-month supply in January.
