February existing-home sales and prices affirm a healthy recovery is underway in the national housing sector, according to the National Association of Realtors.
Sales have been above year-ago levels for 20 consecutive months, while prices show 12 consecutive months of year-over-year price increases.
Total existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 0.8 percent to a seasonally adjusted annual rate of 4.98 million in February from an upwardly revised 4.94 million in January, and are 10.2 percent above the 4.52 million-unit level seen in February 2012. February sales were at the highest level since the tax credit period of November 2009.
Lawrence Yun, NAR chief economist, said conditions for continued housing improvement are at play.
“Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise. Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable,” Yun said. “The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive.”
Total housing inventory at the end of February rose 9.6 percent to 1.94 million existing homes available for sale, which represents a 4.7-month supply at the current sales pace, up from 4.3 months in January, which was the lowest supply since May 2005. Listed inventory is 19.2 percent below a year ago when there was a 6.4-month supply.
The national median existing-home price3 for all housing types was $173,600 in February, up 11.6 percent from February 2012. The last time there were 12 consecutive months of year-over-year price increases was from June 2005 to May 2006. The February gain is the strongest since November 2005 when it was 12.9 percent above a year earlier.
“A strong rise in home values is contributing to housing wealth recovery, which has risen by $1.4 trillion in the past year and looks to top that increase this year,” Yun said. “The extra consumer spending arising from growth in housing wealth is expected to be $70 billion to $110 billion this year.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.53 percent in February from 3.41 percent in January. It was 3.89 percent in February 2012.
NAR president Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said interest rates remain extraordinarily low.
“In the history of mortgage interest rates since 1971, the 30-year fixed rate has been below 4 percent in only 15 months, and those have all been in the past 15 months,” he said. “Even with rising home prices, affordability remains historically favorable because home prices over-corrected during the downturn. This means there is still great value for buyers in the current market.”
The median time on market for all homes was 74 days in February, which is 24 percent below 97 days in February 2012.
“There was an upward bump in the shares of investor and all-cash closed purchases in February. These sales result from purchase offers during the holidays when shopping activity by traditional home buyers slows, but investors, who typically pay cash, remained active,” Yun said. “This is a seasonal pattern, but we’re now seeing a general increase in buyer traffic, which is 25 percent above a year ago.”