Housing Recovery

This morning the National Association of Realtors reported that existing-home sales fell 0.9% in Febraury to an adjusted annual rage of 4.59 million in February from an upwardly revised 4.63 million in January.

Many economists had expected home sales to have risen in February.

Housing Recovery – The good news is that existing-home sales were 8.8 percent higher than the 4.22 million-unit level in February 2011.

The NAR chief economist, said underlying factors are much better compared to one year ago. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market. Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”

The NAR President said: “Supply and demand have become more balanced in more markets, but with tight supply in the lower price ranges — particularly in the West. When markets are balanced, we normally see prices rise one to two percentage points above the rate of inflation, but foreclosures and short sales are holding back median prices. The bottom line is investors and first-time buyers are competing for bargain-priced properties in much of the country, with home prices showing signs of stabilizing in many areas. People realize that homeownership is an investment in their future. Given an apparent over-correction in most areas, over the long term home prices have nowhere to go but up.”

All-cash sales rose to 33 percent of transactions in February from 31 percent in January; they were 33 percent in February 2011. Investors account for the bulk of cash transactions.

Here in the West, existing-home sales declined 3.2 percent, but are 6.1 percent above February 2011. The median price in the West was $195,300, up 3.1 percent from a year ago.

Also today, the Mortgage Bankers Association reported that mortgage applications on a seasonally adjusted basis fell 7.4% in the U.S. last week from one week earlier as interest rates climbed slightly.