By The Associated Press
WASHINGTON – Sales of existing homes fell 0.9 percent in February after an upward revision to the prior month, as improving job prospects, cheaper homes and warm weather led to the best start to the year since the bursting of the housing bubble.
The National Association of Realtors said sales in February fell to a seasonally adjusted annual rate of 4.59 million, compared to an upwardly revised 4.63 million in January. January sales initially were recorded at a 4.57 million annual rate.
These were the best January and February levels in five years, the NAR said.
Economists polled by MarketWatch had expected February sales at a 4.6 million annual rate.
Compared to a year ago, sales were up 8.8 percent.
Lawrence Yun, the chief economist of the trade group, said he expects the gains to be sustainable, noting that unlike last year the pick-up came across the country, noting Pittsburgh; Providence, R.I.; Kansas City, Mo.; and Minneapolis among the areas of strength.
“Our (real-estate agent) members are very enthusiastic,” Yun said. “Buyers are very serious. Last year they were kicking the tires.”
Yun acknowledged that unusually warm weather helped sales this winter but said that wasn’t the only factor.
“Weather may have helped but there’s something more genuine that is lifting January and February sales,” he said.
Daniel Silver, an economist at JPMorgan, agreed.
“The upward trend in the data began before the abnormal weather started, and we do not see a statistically significant relationship between deviations from normal temperatures and existing home sales during winter months,” Silver said in a note to clients.
Yun says this could be an unusual year in which both rental space and homeownership demand will increase. That’s because of an increase in household formation – in other words, more people choosing to move out of a shared space with parents and roommates and into their own lodging.
The median price of an existing home rose 0.3 percent to $156,600 compared to year-ago period. Median prices typically are less in the winter because fewer families move during the school year, so smaller homes are sold.
While slight, that was the first year-on-year increase in prices since November 2010.
Inventories rose 4.3 percent to 2.43 million, or 6.4 months of supply. Inventories typically rise from February through the summer months.
Yun dismissed fears that a glut of homes will hit the market. Shadow inventories are falling as well as the number of homes held by banks, Fannie Mae and Freddie Mac, he said. The level of inventories is consistent with small price increases, Yun added.
CoreLogic separately said that current residential shadow inventory as of January 2012 was 1.6 million units, which was about the same as in October but down from 1.8 million in January 2011.
Distressed sales accounted for 34 percent of all transactions, with foreclosures accounting for 20 percent and short sales accounting for 14 percent. Yun said banks are increasingly approving short sales.
All-cash sales accounted for 33 percent of all transactions, up from 31 percent in January. Investors bought 23 percent of all homes, unchanged from January levels.
First-time buyers accounted for 32 percent of all transactions, down from 33 percent in January.