Existing-home sales rise on deep discounting

Sales up 5.1% in February while prices drop 15.5% in past year, NAR says
By: Rex Nutting: MarketWatch.com
Sales of U.S. pre-owned homes rose 5.1% to a seasonally adjusted annual rate of 4.72 million in February, boosted by "deep" price discounts, the National Association of Realtors reported Monday.

It was the largest percentage gain since July 2003.

Sales are down 4.6% in the past year, the industry trade group reported. February's sales increased in all four regions as tracked by the NAR.

Sales of foreclosed properties or short sales accounted for about 45% of transactions last month the real estate trade group said. Distressed homes are selling for 20% below "normal market prices," the realtors said.

Economists surveyed by MarketWatch had been expecting sales to drop to a pace of 4.45million units from January's 4.49 million annual rate. See Economic Preview.

The median sales price dropped 15.5% in the past year to $165,400 - the second-largest year-over-year price decline on record, coming on the heels of January's 17.5% drop.

Inventories of unsold homes on the market rose by 5.2% to 3.80 million, equating to a 9.7-month supply at the February sales pace. Inventories, which are not seasonally adjusted, typically rise about 5% in February.

Inventories of existing homes can be fluid, as home owners or banks owning foreclosed homes wait for better market conditions before putting their houses up for sale. Any uptick in sales or prices could unleash a wave of homes on the market.

The realtors track only homes offered and sold through the multiple-listing services. Many foreclosures are handled through auctions or are being held off the market until prices improve.

The increase in sales is "obviously good news for the industry and the economy," even if sales remained "very soft," said Lawrence Yun, chief economist for the industry group.

He said he expects that provisions in the recently enacted economic-stimulus package would boost sales by about 1 million this year. The stimulus includes an $8,000 tax credit for first-time home buyers.

February details

Sales of single-family homes rose 4.4%. Condo sales also increased, up 11.4%.

Sales of single-family homes and condos increased by 15.6% in the Northeast, by 6.1% in the South, by 2.6% in the West and by 1% in the Midwest.

Sales in the West are up 30.3% compared with February 2008. In the past year, sales are down 10% in the South, 7.8% in the Midwest and 4.8% in the Northeast.