Existing Home Sales Up 3.9% in February

Washington, DC, March 23, 2007--Existing-home sales rose strongly in February following a healthy gain in January, reaching the highest level since last April, according to the National Association of Realtors.

Total existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 3.9 percent to a seasonally adjusted annual rate1 of 6.69 million units in February from a downwardly revised level of 6.44 million in January, but are 3.6 percent below the 6.94 million-unit pace in February 2006.  Last month’s increase was the biggest monthly rise in three years – sales also rose 3.9 percent in March 2004.

David Lereah, NAR’s chief economist, said the strong gain is a bit of a surprise.  “Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers,” he said.  “Even so, winter storms last month discouraged shopping, and buyers were chilled with the third coldest February on record.  These unusual weather patterns mean home sales that close in March may decline before rebounding later this spring.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.16 percent in the last week, down from an average of 6.29 percent in February.  The 30-year fixed was 6.22 percent in January, and 6.25 percent in February 2006.

The national median existing-home price2 for all housing types was $212,800 in February, down 1.3 percent from February 2006 when the median was $215,700.  The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Pat Vredevoogd Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said the median home price currently is distorted.  “Over the last year, we’ve seen declining sales in many high-cost areas but rising activity in lower cost markets,” she said.  “This change in the geographic composition of sales means we aren’t getting apples-to-apples comparisons in median home prices from a year ago.”

Other indices examining sales of the same properties over time, such as the OFHEO House Price Index, have been showing price gains; however, the OFHEO index is limited to conventional financing. 

“What’s really happening is probably somewhere in between the different measures, but home prices are soft – a year ago we were still seeing bidding pressures and double-digit price growth,” Combs said. “Overall, home prices should rise slowly this year, and many buyers have an opportunity now that was only a dream during the five-year boom.”

Total housing inventory levels rose 5.9 percent at the end of February to 3.75 million existing homes available for sale, which represents a 6.7-month supply at the current sales pace compared with a 6.6-month supply in January.  Raw inventories peaked last July at 3.86 million, and supplies topped at 7.4 months in October.

Single-family home sales increased 3.7 percent to a seasonally adjusted annual rate of 5.88 million in February from 5.67 million in January, but are 3.4 percent below the 6.09 million-unit pace in February 2006.  The median existing single-family home price was $211,100 in February, down 1.5 percent from a year ago.

Existing condominium and co-op sales jumped 5.3 percent to a seasonally adjusted annual rate of 810,000 units in February from a level of 769,000 in January, but are 5.2 percent below the 854,000-unit pace in February 2006.  The median existing condo price3 was $225,400 in February, up 0.5 percent from a year earlier.

Regionally, existing-home sales in the Northeast surged 14.2 percent to a level of 1.21 million in February, and are 3.4 percent higher than February 2006.  The median existing-home price in the Northeast was $265,900, down 1.4 percent from a year earlier.

In the Midwest, existing-home sales rose 3.9 percent in February to a level of 1.58 million, but are 1.9 percent below a year ago.  The median price in the Midwest was $157,000, down 1.3 percent from February 2006.

Existing-home sales in the South increased 1.6 percent to an annual sales rate of 2.58 million in February, but are 4.4 percent below February 2006.  The median price in the South was $175,900, down 2.9 percent from a year ago.

Existing-home sales in the West were unchanged in February, holding at an annual pace of 1.32 million, and are 9.6 percent lower than a year ago.  The median price in the West was $337,100, up 2.2 percent from February 2006.