Interesting and surprising numbers were released by the National Association of Realtors. Sales of existing homes posted an unexpected increase in February when a decline was anticipated. Does this mean the housing market has hit a bottom and things are on the rise? It is hard to say. I think it is an indication that sellers are finally realizing that for them to sell their homes they need to reduce their prices, and this is great news for investors. As prices come down, sales activity will pick up and that is probably what is happening.
In general, we don’t want to put too much stock into one month’s numbers. Numbers are almost always more meaningful when there are trends present. Anything can happen in a snapshot of time. What would indicate the market is turning is 3-4 months or so of sustained growth in different areas such as total sales numbers, price increases, etc.
I’ve included a portion of the AP story below.
WASHINGTON (AP) — After falling for six straight months, sales of existing homes posted an unexpected increase in February which may have reflected more aggressive price cutting by sellers in some parts of the country, a real estate trade group reported.
The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It was the biggest increase in a year and caught economists by surprise. They had been expecting a small decline.
The trade group reported that the median existing sales price in February fell to $195,900. That was the largest year-over-year drop on records that go back to 1999.
Lawrence Yun, chief economist for the Realtors, said that prices in some formerly hot markets in California and Florida were seeing significant price declines now as sellers try to attract buyers.
Analysts cautioned against reading too much into the one-month rise in sales. Many economists are predicting that the steep slump in housing will not bottom-out until later this year after prices fall further and allow huge levels of unsold inventories to be reduced.
“We’re not expecting a notable gain in existing-home sales until the second half of this year, but the (February) improvement is nother sign that the market is stabilizing,” Yun said.
By region of the country, sales surged by 11.3 percent in the Northeast and were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region of the country to see a decline in the sales was the West, where they dropped by 1.1 percent.
Posted by Carter Brown
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