February Existing Home Sales Drop Slightly in February - Prices Up

Existing home sales dropped slightly by 0.6% in February from January numbers while sales prices edged up from $164,900 to $165,100.

Longer-term, both prices (in BLUE) and existing sales ( in RED) are holding steady if not trending down. At best, the housing market looks stabilized, and that's with the homebuyer tax credit and historically low interest rates.

NAR's economist Lawrence Yoon had this to say about the real estate market:

“Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said.

“Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”

Total housing inventory at the end of February rose 9.5 percent to 3.59 million existing homes available for sale, which represents an 8.6-month supply at the current sales pace, up from a 7.8-month supply in January. Raw unsold inventory is 5.5 percent below a year ago.

“The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,” Yun said. “If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.”

In Boston home prices have held up well in cities and towns around the city. I was just talking to a real estate agent and he seemed to think there was more activity because of the tax credit. He was a bit sanguine about what will happen once it expires at the end of April.

Sales trends are regional. The Northeast has seen strong growth in the $1M+ end of the market while The West has gotten clobbered in houses below $100K. While high-end homes have shown the greatest increases in sales over the past 12-months, they represent less than 10% of the unit sales market.

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