Sales of Existing Homes Rise 2.9% in February 2008

Unexpected February increase no assurance that slide is ending

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By Martin Crutsinger,
Associated Press

Nationwide sales of existing homes increased unexpectedly in February after six months of decline, but private economists said it was too soon to say that the prolonged slide in U.S. housing is coming to an end.

The National Association of Realtors said that sales of existing homes rose 2.9 percent in February from January levels, to a seasonally adjusted annual rate of 5.03 million units. It marked the first month-to-month sales increase since last July.

But sales were still 23.8 percent below where they were in February 2007.

Prices continued to slide. The median sales price for single-family homes and condominiums in February dropped 8.2 percent from February 2007, to $195,900 - the biggest slide in the current housing slump.

The median price for just houses was down 8.7 percent from a year earlier, the biggest decline in four decades.

Wilmington-area home sales and prices for February were reported earlier this month. Sales were down 27 percent from February 2007, while the average and median prices were down 7 percent and 5.3 percent, respectively.

Nationally, investors were pleased by a stronger-than-expected housing report.

On Wall Street, which had been expecting another decline in sales, The Dow Jones industrial average rose nearly 190 points, partly on the strength of the sales report.

But economists said they still believed any sustained rebound is many months away.

"The hemorrhaging has stopped but the recovery will be long, slow and painful," said Bernard Baumohl, managing director of the Economic Outlook Group.

"It's unlikely that we will see any sustained jump in home purchases, much less higher prices, until mid-2009 at the earliest," he added.

Brian Bethune, an economist at Global Insight, said, "A quick bounce back in the housing markets is simply not in the cards."

White House press secretary Dana Perino said the increase in sales and a decline in the inventory of unsold homes was encouraging, but "we can't put a lot of stock in just one report."

Lawrence Yun, chief economist for the Realtors, said that some formerly hot markets in California and Florida were seeing significant price declines now as sellers are cutting prices to attract buyers.

"We are not expecting a notable gain in existing-home sales until the second half of this year," he said.

He said that sales should be helped in coming months by recent moves to boost the loan limits on mortgages that can be insured by the Federal Housing Administration and purchased by Fannie Mae and Freddie Mac.

By region of the U.S., 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 to see a sales decline was the West, where sales dropped by 1.1 percent.

The inventory of unsold homes dipped to 4.03 million units in February. That meant it would take 9.6 months to exhaust the supply of homes for sale at the February sales pace.