U.S. Home Sales Plummet 9.6% in February; Median Price Sinks 4.2% Year-over-Year

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More bad news on the U.S. home front today. According to the National Association of Realtors (NAR), existing-home sales fell in February following three straight monthly increases.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, dropped 9.6 percent to a seasonally adjusted annual rate of 4.88 million in February from an upwardly revised 5.40 million in January, and are 2.8 percent below the 5.02 million pace in February 2010.

Lawrence Yun, NAR chief economist, expects an uneven recovery.  "Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers," he said.  "This tug and pull is causing a gradual but uneven recovery.  Existing-home sales remain 26.4 percent above the cyclical low last July."

A parallel NAR practitioner survey shows first-time buyers purchased 34 percent of homes in February, up from 29 percent in January; they were 42 percent in February 2010.

All-cash sales were a record 33 percent in February, up from 32 percent in January; they were 27 percent in February 2010.  Investors accounted for 19 percent of sales activity in February, down from 23 percent in January; they were 19 percent in February 2010.  The balance of sales were to repeat buyers.

The national median existing-home price for all housing types was $156,100 in February, which is 5.2 percent below February 2010.  Distressed homes - sold at discount - accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010.  "The decline in price corresponds to the record level of all-cash purchases where buyers - largely investors - are snapping up homes at bargain prices," Yun explained.  "We'd be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal."

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers should look into loan availability as soon as they decide they want to buy.  "Despite very affordable mortgage interest rates, credit remains a challenge - buyers should check their personal credit, and mortgage availability in their area," he said.

"Realtors are an excellent resource to learn about all of the marketplace factors, but in this tight credit environment it's important to learn up front what a lender might be willing to offer as well as specific programs that might be available in your location," Phipps said.

Total housing inventory at the end of February rose 3.5 percent to 3.49 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.5-month supply in January.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.95 percent in February from 4.76 percent in January; the rate was 4.99 percent in February 2010.

Single-family home sales fell 9.6 percent to a seasonally adjusted annual rate of 4.25 million in February from 4.70 million in January, and are 2.7 percent below the 4.37 million pace in February 2010.  The median existing single-family home price was $157,000 in February, which is 4.2 percent below a year ago.

Existing condominium and co-op sales dropped 10.0 percent to a seasonally adjusted annual rate of 630,000 in February from 700,000 in January, and are 3.1 percent lower than the 650,000-unit level one year ago.  The median existing condo price was $150,400 in February, down 11.1 percent from February 2010.

Regionally, existing-home sales in the Northeast fell 7.2 percent to an annual pace of 770,000 in February and are 8.3 percent below February 2010.  The median price in the Northeast was $230,200, down 9.5 percent from a year ago.

Existing-home sales in the Midwest dropped 12.2 percent in February to a level of 1.01 million and are 9.0 percent lower than a year ago.  The median price in the Midwest was $122,000, which is 5.4 percent below February 2010.

In the South, existing-home sales fell 10.2 percent to an annual pace of 1.84 million in February but are unchanged from February 2010.  The median price in the South was $134,600, down 3.9 percent from a year ago.

Existing-home sales in the West declined 8.0 percent to an annual level of 1.26 million in February and are 2.4 percent below a year ago.  The median price in the West was $190,000, which is 5.2 percent below January 2010. 

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