February existing home sales fell to a 19-month low due to abnormally harsh weather conditions and rising prices, says the National Association of Realtors. However, prices continued to rise as inventory conditions tightened.
Total existing-home sales fell 0.4% in February to a seasonally adjusted annual rate of 4.6 million, compared to 4.62 million the month before. February 2014 existing home sales were 7.1% lower than in February 2013 (4.95 million units).
Existing-homes include co-ops, condominiums, single-family homes and townhomes.
The pace of sales in February was the lowest in 19 months (since July 2012).
Harsh weather affected February existing home sales
National Association of Realtors’ (NAR’s) chief economist, Lawrence Yun, said conditions in February were pretty much the same as in 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.”
“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 average price for an existing home (all housing types) in February was $189,000; 9.1% higher than the same month last year. Yun added “Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years.”
Sixteen percent of February sales consisted of distressed homes – short sales (5%) and foreclosures (11%) – compared to 15% the month before and 25% in February 2013. Foreclosures sold at 16% below market value while short sales were sold for an average 11% discount.
(Source: National Association of Realtors)
Unsold inventory higher than one year ago
Total housing inventory reached 2 million existing homes available for sale in February, “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 NAR wrote>
The average time on market for all homes in February was 62 days, compared to 67 days in January and 74 in February 2013. Foreclosures were on the market for an average of 60 days, short sales for 94 days, and non-distressed homes for 61 days. Thirty-four percent of homes were on the market for less than one month.
In February, the national average commitment rate for a 30-year, fixed rate, conventional mortgage fell to 4.3%, compared to 4.43% in January, and 3.53% in February 2013, according to Freddie Mac.
Twenty-eight percent of purchases consisted of first-time buyers in February, an increase from January’s 26%, but lower than 30% reported in February 2013.
First-time buyers facing tight credit
NAR President Steve Brown, said:
“The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges. 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.”
“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.”
Cash sales made up 35% of all February transactions, higher than January’s 33% and 32% in February 2013. Twenty-one percent of existing home sales in February consisted of individual investors, who typically pay in cash, compared to 20% in January and 22% in February 2013. Seventy-three percent of all investors in February paid in cash.
February existing home sales by region
Existing-home sales in the Northeast dropped 11.3 to an annual rate of 550,000 (12.7% below sales in February 2013). The average price was $237,800, an increase of 1.5% compared to February 2013.
Existing-home sales in the Midwest fell 3.8% to a pace of 1 million – 12.3% below sales in February 2013. Existing homes sold for an average price of $140,900, an increase of 8.6% compared to February 2013.
Existing-home sales in the South increased by 1.5% to an annual level of 1.98 million, a fall of 0.5% compared to February 2013. Existing homes’ medium price was $163,400, a rise of 8.3% compared to February 2013.
Existing-home sales in the West increased by 5.7% to a pace of 1.07 million, which was 10.1% below sales registered in February 2013. Homes were sold for an average price of $279,400, or 18% higher than the same month last year.