Existing home sales rise in February
March 2006
Latest home sales data indicates that existing-home rose in February following five months of decline. This led the National Association of Realtors® to claim that a" stabilization is taking place in the market".
Although total existing home sales increased 5.2 percent in February, they were 0.3 percent below the level last February. The national median existing-home price for all housing types was $209,000 in February, up 10.6 percent from February 2005 when the median was $189,000.
Total housing inventory levels rose 5.2 percent at the end of February which represents a 5.3-month supply at the current sales pace – the same as in January.
Single-family home sales increased 4.7 percent to a seasonally adjusted annual rate of 6.06 million in February from 5.79 million in January, and were 0.2 percent below the 6.07 million-unit pace in February 2005. The median existing single-family home price was $208,500 in February, up 11.6 percent from a year ago.
Regionally existing-home sales in the South fell 2.5 percent in February but were 3.1 percent higher than a year ago. The median price in the South was $182,000, up 11.7 percent from February 2005.
In the Northeast existing home sales rose by an impressive 19.2 percent in February, and were 2.6 percent higher than February 2005. The median price in the Northeast was $263,000, which is 5.2 percent higher than a year ago.
In the Midwest there was a rise of 11.1 percent which was 1.9 percent above a year earlier. The median existing-home price in the Midwest was $160,000, up 3.9 percent from February 2005.
Existing home sales in the West rose 5.1 percent, but were 10.6 percent below February 2005. The median price in the West was $306,000, up 12.1 percent from a year ago.
David Lereah, NAR’s chief economist, said mild weather appears to be responsible for some of the gains in home sales. "Weather conditions across much of the country were unseasonably mild in January and likely were a factor in higher levels of buyer activity, which boosted sales that closed in February," he said. "Higher interest rates had been tapping the breaks, notably in higher-cost housing markets since mortgage interest rates trended up last fall, but we’re seeing signs of stabilization in the market now with the sales rebound. Home sales should level-out in the months ahead."
NAR President Thomas M. Stevens, senior vice president of NRT Inc., warned against expecting the real estate market to continue offering the same return on investment as it had over the past five years "Housing is simply returning to a normal market, where annual home prices will rise a little faster than the overall rate of inflation," said Stevens, "However, in looking at total returns, you need to consider that the typical buyer is making only a modest downpayment but enjoys a return on the full value of the home, which is many times the actual cash investment. In other words, normal is pretty good for the typical homeowner, and that’s what we expect for the foreseeable future."
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