Existing-Home Sales Post Biggest Rise in Three Years

The number of homes sold increased last month by 3.9%, though inventories ticked higher. The median home price fell from a year earlier.
By: Jeff Bater: The Wall Street Journal Online
U.S. existing-home sales unexpectedly climbed in February, but subprime-market woes could chill demand farther down the road.

Home resales rose to a 6.69 million annual rate, a 3.9% increase from January's revised 6.44 million annual pace, the National Association of Realtors said Friday. January's rate was originally estimated at 6.46 million.

The median home price was $212,800 in February, compared with a revised $210,900 in January and a revised $215,700 in February 2006.

NAR chief economist David Lereah said some of the rise might have been due to mild weather. "But fundamentals have improved in the housing market," he said.

The February resales level was above Wall Street expectations of a 6.33 million sales rate for previously owned homes.

Delinquency rates for subprime mortgage loans rose at the end of last year. Wall Street is worried tighter lending standards for borrowers with less-than-sterling credit could slow home sales in the future.

Mr. Lereah predicts subprime problems could cost between 100,000 and 250,000 annual sales of new and existing homes over the next couple years. "Will it affect the housing market? Yes," he said. "But it's not going to lead to an economic recession."

Inventories of homes were up 5.9% at the end of February to 3.75 million available for sale, which represented a 6.7-month supply at the current sales pace. There was a 6.6-month supply at the end of January.

Regionally, existing-home sales were mixed. Sales rose 3.9% in the Midwest, 14.2% in the Northeast, and 1.6% in the South. Demand in the West was flat.