February existing-home sales and prices affirm a healthy recovery is
underway in the housing sector, according to the National Association of
REALTORD®. Sales have been above year-ago levels for 20 consecutive
months, while prices show 12 consecutive months of year-over-year price
increases.
Total existing-home sales, which are completed transactions that
include single-family homes, townhomes, condominiums and co-ops,
increased 0.8 percent to a seasonally adjusted annual rate of 4.98
million in February from an upwardly revised 4.94 million in January,
and are 10.2 percent above the 4.52 million-unit level seen in February
2012. February sales were at the highest level since the tax credit
period of November 2009.
Lawrence Yun, NAR chief economist, says conditions for continued
housing improvement are at play. “Job growth in the improving economy
and pent-up demand are causing both home sales and rental leasing to
rise. Though home prices are rising much faster than rents, historically
low mortgage rates are still making home purchases affordable,” he
says. “The only headwinds are limited housing inventory, which varies
greatly around the country, and credit conditions that remain too
restrictive.”
Total housing inventory at the end of February rose 9.6 percent to
1.94 million existing homes available for sale, which represents a
4.7-month supply at the current sales pace, up from 4.3 months in
January, which was the lowest supply since May 2005. Listed inventory is
19.2 percent below a year ago when there was a 6.4-month supply.
The national median existing-home price for all housing types was
$173,600 in February, up 11.6 percent from February 2012. The last time
there were 12 consecutive months of year-over-year price increases was
from June 2005 to May 2006. The February gain is the strongest since
November 2005 when it was 12.9 percent above a year earlier.
“A strong rise in home values is contributing to housing wealth
recovery, which has risen by $1.4 trillion in the past year and looks to
top that increase this year,” Yun says. “The extra consumer spending
arising from growth in housing wealth is expected to be $70 billion to
$110 billion this year.”
Distressed homes–foreclosures and short sales–accounted for 25
percent of February sales, up from 23 percent in January but down from
34 percent in February 2012. Fifteen percent of February sales were
foreclosures, and 10 percent were short sales. Foreclosures sold for an
average discount of 18 percent below market value in February, while
short sales were discounted 15 percent.
According to Freddie Mac, the national average commitment rate for a
30-year, conventional, fixed-rate mortgage rose to 3.53 percent in
February from 3.41 percent in January; it was 3.89 percent in February
2012.
NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa
Park, Calif., says interest rates remain extraordinarily low. “In the
history of mortgage interest rates since 1971, the 30-year fixed rate
has been below 4 percent in only 15 months, and those have all been in
the past 15 months,” he says. “Even with rising home prices,
affordability remains historically favorable because home prices
over-corrected during the downturn. This means there is still great
value for buyers in the current market.”
The median time on market for all homes was 74 days in February,
which is 24 percent below 97 days in February 2012. Short sales were on
the market for a median of 101 days, while foreclosures typically sold
in 52 days and non-distressed homes took 77 days. One out of three homes
sold in February was on the market for less than a month.
“There was an upward bump in the shares of investor and all-cash
closed purchases in February. These sales result from purchase offers
during the holidays when shopping activity by traditional home buyers
slows, but investors, who typically pay cash, remained active,” Yun
says. “This is a seasonal pattern, but we’re now seeing a general
increase in buyer traffic, which is 25 percent above a year ago.”
For more information, visit www.realtor.org
