According to the latest report from the National Association of REALTORS(R), existing home sales in the US in February decreased 0.6 percent to a seasonally adjusted-annual rate of 5.02 million units in February from a revised level of 5.50 million units in January, however this does represent an increase of 7.0 percent from a year ago when the rate was 4.69 million units (seasonally adjusted).
February’s Numbers Show Real Estate is “Local”
Reinforcing the fact that “all real estate is local” the February Existing Home Sales report paints quite a different picture of the housing market depending upon the region of the country:
- Northeast region – February sales increased by 2.4 percent from January and were up 12.0 percent from a year ago
- Midwest region – February home sales increased by 2.8 percent from January and were up 8.8 percent from a year agao.
- South region – February home sales decreased by 1.1 percent from January but were up 6.9 percent from a year ago.
- West region – February home sales decreased by 4.7 percent but were up 3.4 percent from a year ago.
Less is More
Over 72 percent of all existing home sales in February in the US (72.2 percent) were at sales prices of $250,000 or less with almost 36 percent of those sales being $100,000 or less. While most of the sales were in these lower price ranges, sales of higher priced homes in February were significantly higher than a year ago:

Source: National Association of REALTORS
Lawrence Yun, NAR chief economist, said widespread winter storms in February may mask underlying demand. “Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said. “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”
I don’t like “seasonally adjusted rates of sales”:
If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers, particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.
The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:
- There were 302,000 existing homes sold in February which is a 9.8 percent increase from January’s 275,000 sales and a 7.9 percent increase from February, 2009’s sales of 280,000 units.
- Below are highlights from each region:
- Northeast – 52,000 homes sold in February, 2010, an increase of 26.8 percent from January and an increase of 13.0 percent from the year before.
- Midwest – 68,000 homes sold in February, 2010, an increase of 25.9 percent from January and an increase of 9.7 percent from the year before
- South – 113,000 homes sold in February, 2010, an increase of 8.7 percent from January and an increase of 7.6 percent from the year before.
- West – 69,000 homes sold in February, 2010, a decrease of 9.2 percent from January and a increase of 3.0 percent from the year before.
Other highlights of the NAR Report:
- Median price of homes sold in February in the US was $165,100, about the same as January’s revised median sale price of $164,900 and is 1.8 percent less than the median price from a year ago.
- Distressed sales accounted for 35 percent of all home sales in February, a decrease of 7.8 percent from January’s rate of 38 percent.
- First-Time homebuyers accounted for 42 percent of the home sales in February, up from 40 percent in January.
- Investors were the buyers of 19 percent of the homes in February, up from 17 percent in January.
- Repeat home buyers were responsible for approximately 39 percent of February’s sales down from January’s 43 pecent..
- Total housing inventory at the end of February was 3,589,000 homes for a 8.6 month supply, an increase of 10.3 percent from last months 7.8 month supply.
My Take On the Numbers:
I’m somewhat encouraged by this report and think that it supports my theory that the housing market, at least in many areas of the country, is toying with the “bottom”. I think we are going to see the market fluctuate “near the bottom” for some time and then we will see a recovery that I think will take some time to mature.
What to look out for:
- Interest rates – Rates ALWAYS have an affect on the housing market…presently we have near record-low rates, however the Fed Reserve is indicating they will stop purchasing mortgage-backed securities in the next few days and industry experts feel this will lead to higher interest rates.
- Tax Credits– By all indications the homebuyer tax credits have played a role in getting buyers to pull the trigger and has contributed to home sales. The credits come to an end April 30th, unless extended by Congress which I feel is doubtful, and then we will see what happens to the market afterward. First-time buyers, the biggest benificiaries of the credit, make up 40 percent of the sales currently, so they are s significant component.
- Foreclosures – Foreclosures, REO’s and short-sales all put negative pressure on the housing market in terms of home prices and there is no end in site.
- Underwater Borrower Sentiment– There are a record number of people “underwater” on their homes (owe more than their homes are worth) but, according to Robert Shiller, a noted economist, 80 percent of those borrowers still feel like they should continue to pay their mortgages and stick it out. According to a recent report by First Amercian CoreLogic, this sentiment changes dramatically once homeowners exceed 25 percent negative equity or exceed $70,000 in negative equity…according to the same report the average negative equity for underwater borrowers at the end of 2009 was $70,700. The number of underwater homeowners was 11.3 million at the end of 2009; if the sentiment of these homeowners change and they start walking away from their homes, look out housing market!
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