February Existing Home Sales Continue To Rise, Buoyed By Investors

Sales ofrnexisting homes and their prices continued to rise in February affirming,rnaccording to the National Association of Realtors® (NAR) which released therndata, a healthy recovery is underway in the housing sector.  Existing home sales increased 0.8 percent torna seasonally adjusted annual rate of 4.98 million in February and were 10.2rnpercent above the 4.52 million level in February 2012.  January sales, originally reported at 4.92rnmillion were revised upwards to 4.94 million. </p

Existing home sales,rnwhich include single family homes, condominiums, townhouses, and cooperativernapartment, have increased on an annual basis for 20 consecutive months whilernprices have increased year-over-year for 12 months.  Sales in February were at the highest levelrnsince November 2009 when the homebuyer tax credit was in effect.  </p

Lawrence Yun, NAR chief economist,rnsaid conditions for continued housing improvement are at play.  “Jobrngrowth in the improving economy and pent-up demand are causing both home salesrnand rental leasing to rise.  Though home prices are rising much fasterrnthan rents, historically low mortgage rates are still making home purchasesrnaffordable,” he said.  “The only headwinds are limited housing inventory,rnwhich varies greatly around the country, and credit conditions that remain toornrestrictive.”</p

Single-family home sales slipped 0.2rnpercent to a seasonally adjusted annual rate of 4.36 million in February fromrnan upwardly revised 4.37 million in January, but are 8.7 percent above the 4.01rnmillion-unit pace one year earlier. Existingrncondominium and co-op sales rose 8.8 percent to an annualized rate of 620,000rnin February from 570,000 in January, and are 21.6 percent above thern510,000-unit level a year ago. </p

The national median existing-homernprice for all housing types was $173,600 in February, up 11.6 percent fromrnFebruary 2012 and the strongest annual increase since May 2006 which alsornmarked the last time there were 12rnconsecutive months of year-over-year price increases. The median single-familyrnhome price rose 11.3 percent to $173,800 and the median condo price wasrn$172,000, an annual increase of 13.9 percent.</p

“A strong rise in home values isrncontributing to housing wealth recovery, which has risen by $1.4 trillion inrnthe past year and looks to top that increase this year,” Yun said.  “Thernextra consumer spending arising from growth in housing wealth is expected to bern$70 billion to $110 billion this year.”</p

The inventory of existing homes rosern9.6 percent to 1.94 million, a 4.7-month supply at the currentrnsales pace.  In January there was a 4.3rnmonth supply, the lowest since May 2005 and in February 2012 the inventoryrnstood at a 6.4-month supply.</p

Foreclosures accounted for 15rnpercent of existing home sales in February and short sales for 10 percentrncompared to 14 percent and 9 percent in January.  Total distressed sales in February 2012rnrepresented 34 percent of all sales.  Foreclosuresrnsold for an average discount of 18 percent below market value in February,rnwhile short sales were discounted 15 percent.</p

The median time on market for allrnhomes was 74 days in February compared to 97 days in February 2012.  Shortrnsales were on the market for a median of 101 days, while foreclosures typicallyrnsold in 52 days and non-distressed homes took 77 days.  One out of threernhomes sold in February was on the market for less than a month.</p

The percentage of first-time buyers wasrnunchanged from January at 30 percent and investors accounted for 22 percent ofrnsales compared to 19 percent in January. rnThirty-two percent of sales were all cash compared to 28 percent inrnJanuary.</p

 “There was an upward bump in the shares ofrninvestor and all-cash closed purchases in February. These sales result fromrnpurchase offers during the holidays when shopping activity by traditional homernbuyers slows, but investors, who typically pay cash, remained active,” Yunrnsaid.  “This is a seasonal pattern, but we’re now seeing a general increasernin buyer traffic, which is 25 percent above a year ago.” </p

February existing-homernsales in the Northeast fell 3.1 percent to an annual rate of 630,000, but are 8.6 percent abovernFebruary 2012.  The median price in the Northeast was $238,800, which isrn7.6 percent above a year ago.</p

Sales in thernMidwest slipped 1.7 in February to a pace of 1.14 million but are 12.9 percentrnabove a year ago.  The median price in the Midwest was $129,900, up 7.7rnpercent from February 2012.</p

Salesrnincreased 2.6 percent to an annual level of 2.01 million in the South and are 14.9 percent above Februaryrn2012.  The median price was $150,500, 9.3rnpercent higher than a year ago.</p

The West saw salernrise 2.6 percent to a pace of 1.20 million in February and are 1.7 percentrnabove a year ago.  With limited choices and multiple bidding, the medianrnprice in the West rose to $237,700, an annual increase of 22.7 percent.

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