February Existing Home Sales Stumble
February existing home sales gave back nearly all of its January gains, the National Association of Realtors reported yesterday.
NAR said total existing-home sales fell by 3.7 percent to a seasonally adjusted annual rate of 5.48 million in February from 5.69 million in January, nearly canceling out a 3.8 percent gain in January. From a year ago, sales rose by 5.4 percent.
Single-family home sales declined by 3 percent to 4.89 million in February from 5.04 million in January, but improved by 5.8 percent from a year ago (4.62 million). The median existing single-family home price rose to $229,900 in February, up 7.6 percent from a year ago. Existing condominium and co-op sales fell by 9.2 percent to 590,000 units in February, but improved by 1.7 percent from a year ago. The median existing condo price rose to $216,100 in February, 8.2 percent above a year ago.
Regionally, improvement in the largest region (the South) could not offset decreases elsewhere. Sales in the South in January rose by 1.3 percent to 2.34 million and by 5.9 percent from a year ago. The median price in the South rose to $205,300, up 9.6 percent from a year ago.
Sales in the West decreased by 3.1 percent to 1.25 million in February, but improved by 9.6 percent from a year ago. The median price in the West rose to $339,900, up 9.6 percent from a year ago. Sales in the Northeast slumped by 13.8 percent to 690,000, but improved by 1.5 percent above a year ago. The median price in the Northeast rose to $250,200, 4.1 percent higher than a year ago. Sales in the Midwest fell by 7.0 percent to 1.20 million in February, but improved by 2.6 percent from a year ago. The median price in the Midwest rose to $171,700, up 6.1 percent from a year ago.
Mark Vitner, senior economist with Wells Fargo Securities, said despite the February slump, existing home sales are still off to a strong start for the year. He noted home sales are now more in line with pending sales, which had fallen in recent months.
“The [February] decline was somewhat expected following January’s surprisingly strong 3.3 percent increase, but February’s report did come in slightly below the consensus estimate,” Vitner said. “Sales have averaged a 5.56-million unit pace over the past three months and remain above their year ago levels nationally and at all four regional levels.”
NAR Chief Economist Lawrence Yun said closings retreated in February as too few properties for sale and weakening affordability conditions stifled buyers in most of the country. “Realtors are reporting stronger foot traffic from a year ago, but low supply in the affordable price range continues to be the pest that’s pushing up price growth and pressuring the budgets of prospective buyers,” he said. “Newly listed properties are being snatched up quickly so far this year and leaving behind minimal choices for buyers trying to reach the market.”
NAR reported the median existing-home price for all housing types in February rose to $228,400, up 7.7 percent from a year ago ($212,100). February’s price increase was the fastest since last January (8.1 percent) and marks the 60th consecutive month of year-over-year gains.
Total housing inventory at the end of February increased by 4.2 percent to 1.75 million existing homes available for sale, but fell 6.4 percent lower than a year ago (1.87 million) and has fallen year-over-year for 21 straight months. Unsold inventory is at a 3.8-month supply at the current sales pace (3.5 months in January).
Vitner said the housing market remains in favor of sellers. “February’s dip in home sales allowed inventories to rebound somewhat,” he said. “With overall inventories as low as they are, sellers are selling their homes very quickly…The hottest markets remain mostly in the West, including San Francisco, Seattle and Denver, where strong job growth in the tech sector and limited new construction has kept inventories incredibly lean.”
NAR said all-cash sales represented 27 percent of transactions in February (matching the highest since November 2015), up from 23 percent in January and 25 percent a year ago. Individual investors purchased 17 percent of homes in February, up from 15 percent in January but down from 18 percent a year ago. Seventy-one percent of investors paid in cash in February (matching highest since April 2015). First-time buyers represented 32 percent of sales in February, down from 33 percent in January but up from 30 percent a year ago.
The report said properties typically stayed on the market for 45 days in February, down from 50 days in January and less than a year ago (59 days). Short sales were on the market the longest at a median of 214 days in February, while foreclosures sold in 49 days and non-distressed homes took 45 days. Forty-two percent of homes sold in February were on the market for less than a month.
NAR said distressed sales represented 7 percent of sales for the third straight month in February, down from 10 percent a year ago. Six percent of February sales were foreclosures; 1 percent were short sales. Foreclosures sold for an average discount of 18 percent below market value in February (14 percent in January), while short sales were discounted 17 percent (10 percent in January).
