From Inman News Features
Sales of existing single-family homes slipped in February compared with January’s record pace, but remained at the second-highest level since recordkeeping began in 1968, according to the National Association of Realtors.
Resales of existing homes edged down 2.8 percent in February to a seasonally adjusted annualized rate of 5.88 million units from an upward-revised level of 6.05 million units in January. But last month’s sales activity was 11.6 percent above the 5.27-million unit pace in February 2001. Other than January, the prior highest monthly pace on record was an annualized rate of 5.49 million homes sold, recorded in August.
NAR Chief Economist David Lereah said February’s housing market data proved stronger than expectations, thanks to favorable market conditions and moderate winter weather.
“At first glance, this level of activity doesn’t seem sustainable, but strong market fundamentals and good weather have given us some unusually strong levels of existing-home sales,” Lereah said.
Lereah said home sales still may decline to “more sustainable levels” this year, assuming the economy continues to gain momentum and mortgage interest rates increase. But the year’s total sales should still be close to last year’s record.
The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.89 percent in February, down from 7 percent in January and 7.05 percent in February 2001, according to Freddie Mac. But the average last week hit 7.14 percent, the highest level since the first week of this year.
NAR President Martin Edwards Jr. hinted that rising interest rates might not dampen the nation’s home-buying fervor.
“Low mortgage interest rates are the key to a strong housing market, but rising consumer confidence and a growing number of households bode well for the future,” he said.
The national median existing-home price was $150,000 in February, up 8.2 percent from February 2001, when the median price was $138,600. The median is the midpoint at which half of the homes sold for more and half sold for less.
Lereah said lean housing inventories are placing upward pressure on home prices, but the pace of appreciation may moderate if the supply and demand for homes comes into balance later this year.
“The supply of homes on the market is historically low with multiple buyers competing for the same house in many areas across the country,” he said. “We expect the balance between buyers and sellers to improve as the year progresses, so we are forecasting the median price to increase 5.1 percent this year.”
Housing inventory levels at the end of February stood at 2.08 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace, a level unchanged compared with the end of January.
The inventory is 10.1 percent above the 1.89 million homes that were available for sale in February 2001, which represented a 4.3-month supply at the then pace of sales.
“We generally need a five-to-six month supply to have a balanced market between buyers and sellers,” Lereah explained.
The existing-home sales pace in the South fell 4.2 percent in February to an annualized rate of 2.29 million units, which was 8.5 percent above February 2001’s figure. The median price of an existing home in the South was $139,400, which was 8.5 percent higher than in February 2001.