Existing-home sales declined slightly in February, with modest gains in the Northeast and Midwest offset by softer sales in the South and West, according to the National Association of REALTORS®.

Existing-home sales, which are finalized transactions that include single-family, townhomes, condominiums, and co-ops, slipped 0.6 percent nationally to a seasonally adjusted annual rate of 5.02 million units in February from 5.05 million in January, but are 7.0 percent higher than the 4.69 million-unit pace in February 2009.

Lawrence Yun, NAR chief economist, says widespread winter storms in February may mask underlying demand. “Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he says. “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”

Total housing inventory at the end of February rose 9.5 percent to 3.59 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 percent below a year ago.

Test for Housing Turnaround

“The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,” Yun said. “If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.”

The national median existing-home price for all housing types was $165,100 in February, which is 1.8 percent below February 2009. Distressed homes, generally sold at discount, accounted for 35 percent of sales last month.

A parallel NAR practitioner survey shows first-time buyers purchased 42 percent of homes in February, up from 40 percent in January. Investors accounted for 19 percent of transactions in February, compared with 17 percent in January; the remaining sales were to repeat buyers.

NAR President Vicki Cox Golder says some buyers are just beginning to realize the urgency of acting before the contract deadline for the tax credit. “If home buyers want this tax credit there is literally no time to waste,” she says.

Rates Remain Low

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage dipped to 4.99 percent in February from 5.03 percent in January; the rate was 5.13 percent in February 2009.

Single-family home sales declined 1.4 percent to a seasonally adjusted annual rate of 4.37 million in February from a pace of 4.43 million in January, but are 4.3 percent higher than the 4.19 million level a year ago. The median existing single-family home price was $164,300 in February, down 2.1 percent from February 2009.

Existing condominium and co-op sales rose 4.8 percent to a seasonally adjusted annual rate of 650,000 in February from 620,000 in January, and are 30.3 percent above the 499,000-unit pace in February 2009. The median existing condo price was $170,200 in February, down 0.2 percent from a year ago.

Regional Statistics

• Northeast: Regionally, existing-home sales in the Northeast rose 2.4 percent to an annual pace of 840,000 in February and are 12.0 percent above a year ago. The median price in the Northeast was $254,700, up 7.5 percent from February 2009.
• Midwest: Existing-home sales in the Midwest increased 2.8 percent in February to a level of 1.11 million and are 8.8 percent higher than February 2009. The median price in the Midwest was $128,000, which is 2.0 percent below a year ago.
• South In the South, existing-home sales slipped 1.1 percent to an annual pace of 1.85 million in February but are 6.9 percent above a year ago. The median price in the South was $139,600, down 4.2 percent from February 2009.
• West Existing-home sales in the West fell 4.7 percent to an annual rate of 1.22 million in February but are 3.4 percent higher than February 2009. The median price in the West was $207,900, down 9.8 percent from a year ago. “A lack of affordable housing inventory is holding back sales and pressuring prices to be bid upwards in many California markets,” Yun notes.

— NAR