NAR: Existing-Home Sales Down Slightly In February

Just as was the case in January, rising home prices, tighter lending standards, increasing mortgage interest rates, limited inventory, harsh winter weather and a poor job market converged to make February a lackluster month for home sales, the National Association of Realtors (NAR) reports.

Total existing-home sales – including single-family homes, townhouses, condominiums and co-ops – declined 0.4% to a seasonally adjusted annual rate of 4.6 million in February – down from 4.62 million in January and 7.1% below the 4.95 million-unit level in February 2013, according to NAR. February's pace of sales was the lowest since July 2012, when it stood at 4.59 million.

Single-family home sales edged down 0.2% to a seasonally adjusted annual rate of 4.04 million in February – down slightly from 4.05 million in January and down 6.9% from the 4.34 million-unit level in February 2013. The median existing single-family home price was $189,200 in February, up 9% from a year ago.

In a release, Lawrence Yun, chief economist for NAR, says conditions in February were largely unchanged from January.

"We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago," he says. "Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year."

Foreclosures and short sales accounted for 16% of February sales, compared with 15% in January and 25% in February 2013.

As per the report, 11% of February sales were foreclosures and 5% were short sales. Foreclosures sold for an average discount of 16% below market value in February, while short sales were discounted 11%.

Total housing inventory at the end of February rose 6.4% to about 2 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 4.9 months in January. Unsold inventory is 5.3% above a year ago, when there was a 4.6-month supply.

The limited inventory means homes are selling faster than they did last year: According to NAR, median time on market for all homes was 62 days in February, down from 67 days in January and 74 days on market in February 2013. Short sales were on the market for a median of 94 days in February, while foreclosures typically sold in 60 days, and non-distressed homes took 61 days. Thirty-four percent of homes sold in February were on the market for less than a month.

Interestingly, a dip in the average interest rate for a 30-year, conventional, fixed-rate mortgage in February had little impact on overall home sales. According to Freddie Mac, the average commitment rate declined to 4.30% in February from 4.43% in January. The rate in February 2013 was 3.53%.

First-time buyers accounted for 28% of purchases in February, up from 26% in January, but down from 30% in February 2013.

Steve Brown, president of NAR and co-owner of Irongate Inc. Realtors in Dayton, Ohio, says student debt appears to be a factor in the weak level of first-time buyers.

"The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges," Brown says. "However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a down payment identified student debt as the biggest obstacle."

All-cash sales comprised 35% of transactions in February, up from 33% in January and 32% in February 2013. Individual investors, who account for many cash sales, purchased 21% of homes in February, compared with 20% in January. They accounted for 22% of all sales in February 2013. Seventy-three percent of investors paid cash in February, according to NAR.

For more, including a breakdown of existing-home sale activity by region, click here.


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