Existing-home sales continued their strong year-over-year increases with the latest data for February, as sales rose 8.8 percent from last year to a seasonally-adjusted annual rate of 4.59 million, according to the National Association of Realtors.
Though monthly sales of existing properties, which encompasses single-family, townhouses, condominiums and co-ops, was down 0.9 percent from January to February, the media home price for sales was up 0.3 percent for the month, and distressed sales made up a smaller share of total sales volume at 34 percent, down from 35 percent in January and 39 percent a year ago.
Lawrence Yun, NAR’s chief economist, said that though the housing recovery is a bit uneven, there is considerable demand in the market (a topic we recently reported on).
“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,” Yun said. “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.”
NAR President Moe Veissi said the imbalances of supply and demand have contributed to the uneven recovery.
“Supply and demand have become more balanced in more markets, but with tight supply in the lower price ranges – particularly in the West,” Veissi said. “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,” Veissi continued. “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.”
NAR also reported on a number of other stats related to home sales. For instance, housing inventory at the end of February was up by 4.3 percent to 2.43 million existing homes on the market, which is a 6.4-month supply (six months is considered normal). That increase reverses a recent trend of declining home supply, a likely result of the mortgage settlement.
During the robo signing freeze in 2011, the supply of REO properties was tightly constricted, but with the settlement done and filed, banks are moving through their inventories and increasing REO output. Inventories peaked at 4.04 million in July 2007, and are 19.3 percent lower than a year ago.
Also, all-cash purchases rose from 31 percent in January to 33 percent in February, and investors accounted for 23 percent of February’s home purchases, which was unchanged from January.
Existing-home sales in the Midwest rose 1.0 percent in February to a pace of 1.02 million, which is 13.3 percent higher than February 2011.