Home prices continued to show solid growth in most of the country due to limited inventory conditions, but rising prices and severe winter weather caused existing-home sales to slip in February, according to the National Association of REALTORS®.
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.4 percent to a seasonally adjusted annual rate of 4.60 million in February from 4.62 million in January, and 7.1 percent below the 4.95 million-unit level in February 2013. February’s pace of sales was the lowest since July 2012, when it stood at 4.59 million.
Lawrence Yun, NAR chief economist, says conditions in February were largely unchanged from January. “We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago,” he says. “Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year.”
The median existing-home price for all housing types in February was $189,000, which is 9.1 percent above February 2013. “Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years,” Yun added.
Distressed homes – foreclosures and short sales – accounted for 16 percent of February sales, compared with 15 percent in January and 25 percent in February 2013.
Eleven percent of February sales were foreclosures, and 5 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in February, while short sales were discounted 11 percent.
Total housing inventory at the end of February rose 6.4 percent to 2.00 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 4.9 months in January. Unsold inventory is 5.3 percent above a year ago, when there was a 4.6-month supply.
The median time on market for all homes was 62 days in February, down from 67 days in January and 74 days on market in February 2013. Short sales were on the market for a median of 94 days in February, while foreclosures typically sold in 60 days and non-distressed homes took 61 days. Thirty-four percent of homes sold in February were on the market for less than a month.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 4.30 percent in February from 4.43 percent in January; the rate was 3.53 percent in February 2013.
First-time buyers accounted for 28 percent of purchases in February, up from 26 percent in January, but down from 30 percent in February 2013.
NAR President Steve Brown, says student debt appears to be a factor in the weak level of first-time buyers. “The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges,” he says. “However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle.”
Brown notes the survey results are for recent homebuyers. “It’s clear there are other people who would like to buy a home that are not in the market because of debt issues, so we can expect a lingering impact of delayed home buying,” Brown adds.