By Mike Caggeso
Existing home sales in the United States unexpectedly rose in February, breaking a six-month streak of declines and signaling a turnaround for the browbeaten housing market and U.S. economy.
Purchases climbed 2.9% to an annual rate of 5.03 million, the National Association of Realtors (NAR) reported. Existing home prices continued their decline, with the average home price falling from $213,500 in February 2007 to $195,900, an 8.2% drop and the largest monthly decline since 1968.
However, nearly half of metropolitan areas reported price increases, with healthy gains in Oklahoma City and Trenton, N.J.
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"In other areas such as Sacramento, a rapid price decline has induced buyers to come into the market and sales are now rising," Lawrence Yun, NAR chief economist, said in a statement. "The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers."
The news gave the markets a nice bump in morning trading. And while Yun is pleased with the improved statistics, he said not to read too much into one month's data.
"We're not expecting a notable gain in existing-home sales until the second half of this year, but the improvement is another sign that the market is stabilizing," he said. "As inventories are drawn down, prices in many markets should go positive later this year."
Joel Naroff, president and chief economist of Naroff Economic Advisors, agrees, saying he expects prices to continue falling. As that happens, home sales will continue inching up.
"Let's face it, housing is not a bright light in this economy. And it is not likely to be that for quite some time," Naroff said. "But as I have been saying for over a month now, it appears that the housing market may be trying to make a bottom."
In the Northeast, existing home sales jumped 11.3% to an annual pace of 890,000 in February. However, that figure is 26.4% below that of February 2007. The median home price in the region went up 0.4% to $264,800.
In the Midwest, existing home sales rose 2.5% in February to a level of 1.24 million, and that is 19.5% below a year ago. The median price in the Midwest was $143,900, which is 7.1% lower than February 2007.
In the South, existing home sales increased 2.1% to an annual rate of 1.99 million in February, 22% below February 2007. The median price in the South was $163,400, down 8.6% from a year ago.
In the West, existing home fell 1.1% to an annual rate of 920,000 in February, 29.2% below a year ago. The median price in the West was $290,400, down 13.4 percent from February 2007.
Overall housing inventory fell 3% to 4.03 million homes available, which represents a 9.6-month supply, down from 10.2-month supply in January.
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Existing Home Sales Rise In February