Sales of existing single-family, coop and condominium homes took an unexpectedly sharp turn downward in February, dropping 9.6% to a seasonally adjusted annual rate of 4.88 million from an upwardly revised 5.40 million in January, the National Association of Realtors reported Monday. That pace was 2.8% below the 5.02 million pace in February 2010.
Wall Street was expecting a drop of just under 4% to a rate of 5.12 million.
Prices fell to their lowest level in nearly 10 years as all-cash deals and foreclosure sales of less-desirable properties continued to skew the market.The national median price for all housing types fell to $156,100, down from $164.600 in February 2010 and down from $198,100 in calendar 2008.
Single-family sales fell 9.6% to a rate of 4.25 million from 4.70 million in January, 2.7% below February 2010. The single-family price was down to $157,000 from $158,500 in January, 4.2% behind February last year.
Lawrence Yun, the Realtors' chief economist, attempted to put the best face on what was widely viewed as distressing data. "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," he said. "This tug and pull is causing a gradual but uneven recovery.Existing-home sales remain 26.4% above the cyclical low last July."
Inventory of unsold homes at month's end rose 3.5% to 3.49 million, an 8.6-month supply up from 7.5 months in January. This was taken as good news by Michael Rehaut, home building analyst at J.P. Morgan, who wrote in a research note that the 3.5% rise in inventory is well below the historical seasonal jump of 5.4% and that single-family inventory was up only 1.7% versus a historical average of 3.5%.
All-cash sales were at a record 33% during the month, the NAR said, up from 32% in January. First-time buyers accounted for 34% of sales, down from 42% a year prior; investors comprised 19% of sales.
Condo and co-op sales dropped 10.0% to a rate of 630,000, and are 3.1 lower than a year earlier, with the median condo price down 11.1% to $150,400.
The declines were felt across all four regions. The Northeast was down 7.2% to a pace of 770,000, 8.3% below February 2010. The median price in the Northeast was $230,200, down 9.5% from a year earlier. The Midwest dropped 12.2% to 1.01 million, 9.0% lower year-over-years, with the media price down 5.4% to $122,000. The South fell 10.2% to 1.84 million, flat with last February, with the median price down 3.9% to $134,600. The West was off 8% to a rete of 1.26 million, a drop of 2.4% year-over-year, with the median price down 5.2% to $190,000.
Said Yun, "The decline in price corresponds to the record level of all-cash purchases where buyers -- largely investors -- are snapping up homes at bargain prices. We'd be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal."
The chairman of the North Carolina Bankers Association on Friday said that a big part of the logjam in lending is being caused by federal bank regulators, who have been operating with newfound zeal under Dodd-Frank financial re-regulation. "The reason banks aren't lending money isn't because we're hoarding cash and waiting for better days," said the NCBA's Larry Barbour. "It's because the regulatory process, the examination process specifically, is impeding our efforts."
He added, "The attitude of banks is, I'm not going to make a loan, because I'll get into trouble making a loan."
Carl Reichardt at Wells Fargo Securities cited the poor lending environment in his research alert, writing, "This data supports a choppy bottom in housing activity but underscores the importance of a more normal credit underwriting environment as a likely coincident condition required for a sharper recovery in activity."