Existing-Home Sales Drop

The Wall Street Journal

23 March  2010

Sales of existing homes fell a third time in a row during February, but the decline was less than expected, spurring hope for a turnaround in the spring.

Home resales tumbled by 0.6%, to a 5.02 million annual rate from an unadjusted 5.05 million in January, the National Association of Realtors said Tuesday.

Economists surveyed by Dow Jones Newswires expected sales last month to decrease 2.0%, to a rate of 4.95 million.

The median price for an existing home was $165,100 in February, down 1.8% from February 2009. “There’s some sign prices are stabilizing, but it’s a very, very fragile recovery,” Yun said.

Severe winter weather affected sales in February. Demand fell much more sharply in December and January, after a surge in sales last fall because of an $8,000 government tax credit for first-time buyers.

The tax break was extended and includes sales through April 30 that close before July 1. Realtors are hoping for a second surge in sales. “I am crossing my fingers,” NAR economist Lawrence Yun said.

Aside from the tax break, low interest rates and falling prices have helped buyers look past joblessness in the U.S. Year over year, sales were up 7.0% in February.

The NAR said February inventories rose and prices fell.

Inventories of used homes increased by 9.5% at the end of the month to 3.59 million available for sale. That represented a 8.6-month supply at the current sales pace, compared to a 7.8-month supply in January.

The average 30-year mortgage rate was 4.99% in February, down from 5.03% in January, Freddie Mac data showed.

Once the latest tax credit expires, other factors, particularly joblessness, will influence whether sales stabilize or slump.

Regionally, February sales were mixed, rising 2.4% in the Northeast and 2.8% in the Midwest while dropping 1.1% in the South and 4.7% in the West.