Although existing-home sales increased in February, reversing losses in January, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to the National Association of Realtors (NAR).
Existing-home sales – including single-family homes, townhomes, condominiums and co-ops – rose 5.1% to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. The sales totals are nonetheless 4.6% below the 4.95 million-unit level in February 2008. Seasonal adjustment factors are more volatile in winter months, NAR says, but sales rates over the past few months show dampened sales activity.
Lawrence Yun, NAR chief economist, says first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges.
"Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 percent to 45 percent of transactions in February," Yun says. "Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price."
The national median existing-home price for all housing types was $165,400 in February, down 15.5% from a year ago when the median was $195,800. "Given the downward distortion in price comparisons due to distressed sales, it's important for owners to keep in mind that this doesn't equate to a similar loss of value for traditional homes in good condition," Yun explains.
Yun says a recovery in the West is much stronger than expected. "Strong sales gains in the West are led by California, where the median listing price is beginning to rise for the first time in three years," he says.
Single-family home sales rose 4.4% to a seasonally adjusted annual rate of 4.23 million in February from a level of 4.05 million in January, but sales are 3.6% below the 4.39 million-unit pace in February 2008. The median existing single-family home price was $164,600 in February, down 15% from a year ago.
Existing condominium and co-op sales increased 11.4% to a seasonally adjusted annual rate of 490,000 units in February from 440,000 units in January, but are 13.1% lower than the 564,000-unit pace a year ago. The median existing condo price was $172,200 in February, which is 18.7% lower than in February 2008.
Regionally, existing-home sales jumped the most in the Northeast, increasing 15.6% to an annual pace of 740,000 in February. Still, the sales totals are 14.9% below levels seen in February 2008. The median price in the Northeast was also down from a year ago, at $251,200. Existing-home sales in the Midwest increased by 1%, in the South by 6.1% and in the West by 2.6%.