Existing home sales fell sharply in February

Existing home sales in the US fell more than expected in February, indicating an uneven recovery in the housing industry. Sales of previously owned homes dropped 9.6 percent to 4.88 million in February compared with an upwardly revised figure of 5.40 million in January, the National Association of Realtors said on Monday. Markets had the existing homes sales to fall to 5.05 million in February.

“Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” said Lawrence Yun, chief economist at NAR.

Besides, the median price of homes sold fell by 5.2 percent to $156,100 in February year-on-year, recording the lowest levels since April 2002.

“The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun said. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

The inventory of existing homes available for sale rose 3.5 percent to 3.49 million in February, representing 8.6 month supply, up from 7.5-month supply in January.

The people in the US are finding it difficult to buy homes as the nation suffers from high unemployment rate and stricter lending norms, even though mortgage rates remain low.

A report from the Commerce Department last week showed that the housing starts dropped 22.5 percent to a seasonally adjusted annual rate of 479,000 units in February, the biggest decline since March 1984. Also, new building permits, a measure of future construction, fell 8.2 percent to 517,000.