General Market info

Existing-Home Sales Rise in February

Existing-home sales increased in February, reversing losses in January, according to a recent report from the National Association of Realtors®. Even so, sales activity remains relatively soft, reflecting additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January. Seasonal adjustment factors are more volatile in winter months, but sales rates over the past few months show dampened sales activity.

“Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” said Lawrence Yun, NAR chief economist, noting that most of the activity concentrated in lower price ranges. “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 percent from a year ago when the median was $195,800 and conditions were close to normal.

“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,” said Yun, adding that a recovery in the West was 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.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage edged up to 5.13 percent in February from a record low 5.05 percent in January; the rate was 5.92 percent in February 2008.