By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – U.S. sales of existing single-family homes, town
homes, condominiums and cooperatives in February fell 9.6% to 4.88
million after seasonal adjustment, raising some question whether the
housing recovery is actually being sustained, the National Association
of Realtors reported Monday morning.

Expectations for February sales had been higher, 5.15 million.
January was revised upward slightly, to 5.40 million. Before seasonal
adjustment, actual February sales rose 2.8% but typically rise faster in
that month.

With “just looking at the data itself, one cannot say that we are
in a recovery,” NAR Chief Economist Lawrence Yun told reporters just
prior to publication of the report.

He said weather, continuing tightness of credit and cancellation
and postponement of sales due to appraisal stringency are all possible
reasons for “choppy, uneven” sales performance and he said he still is
forecasting 5.3 million sales for this year.

However, he added, “If the price declines persist, then even with
jobs recovery, it could hamper some buying enthusiasm.” On the
other side, “we also see that in the large price-decline areas — Vegas,
Phoenix, the Florida markets — we are seeing buyers coming in. So the
broad conditions are there for recovery, but the psychology factor is
also unpredictable.”

The national median price of $156,100 in February was 5.2% lower
than a year earlier. Prices dropped in all geographic regions, with the
biggest drop 9.5% in the Northeast.

Sales also dropped in all four regions, with the biggest drop
12.2% in the Midwest.

Yun remained hopeful for better months ahead, saying “jobs creation
is really helping,” and he expected that February’s price level “is the
low point” with prices usually rising as listings increase in the spring
and summer. He said he expects existing home prices to be higher a year
from now.

The “middle market,” between $100,000 and $500,000 houses, “is
really being held back,” he said, while the extreme low end and the
higher end sales are increasing.

All-cash sales in February were 33% of the total, “which may
actually be an all-time high,” he said, though the NAR has only been
measuring that proportion since 2008. “In prior years all-cash sales
were only about 10%,” he said, suggesting investors can’t get loans and
first-time buyers are betting the cash from family members.

Inventories of 3.49 million units in February were an 8.6-months
supply at the current sales rate. “I do anticipate inventories rising in
the coming months,” Yun said, which is a “seasonal pattern” of being
very low in the winter months and then expanding as new listings pour
in, in the spring.

Sales of single-family houses also dropped 9.6% and condo sales
dropped 10.0%. Prices for the two categories were very different, with
singles prices dropping 4.2% and condo prices off 11.2% versus a year
earlier.

Part of the price drop is the effect of the high proportion of
distressed sales, he said. Thirty-nine of all sales in February were of
distressed properties, the highest proportion since April 2009. “That
needs to occur,” he said, yet can be a factor in influencing future
sales.

Yun noted what he said was a growing and unusual disparity between
the prices of new houses and existing houses. “Historically the price
premium for a new house is about 15%,” he said, but now “new home prices
are 45% higher than existing home prices.”

While the existing home price is dragged down by the presence in
the market of distressed properties existing home prices now “are way
below the price of construction,” which he said is a “true bargain” for
buyers.

** Market News International Washington Bureau: 202-371-2121 **

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