The National Association of Realtors reported Friday that existing home sales rose 3.9% in February to a seasonally adjusted annual rate of 6.69 million, the strongest gain since March of 2004.

Coming on top of what NAR called "healthy" gains in January, the new data suggests the housing market is improving, said the NAR, although its chief economist, David Lereah, allowed that he was surprised by the gain. Still, the NAR sees the possibility of a slowdown in March.

"Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers," he said. "Even so, winter storms last month discouraged shopping, and buyers were chilled with the third coldest February on record. These unusual weather patterns mean home sales that close in March may decline before rebounding later this spring."

Regionally, sales were up 14.2% to 1.21 million in the Northeast in February compared to January and up 3.4% from the same month last year. The median price was $265,900, down 1.4% from a year earlier. In the Midwest, sales rose 3.9% to 1.58 million, but are 1.9% below a year ago. The median price was $157,000, down 1.3% from February 2006. The South increased 1.6% to 2.58 million in February, 4.4% below February 2006. The median price was $175,900, down 2.9% from a year ago. Sales were flat with January in the West but 9.6% behind February 2006. The median price rose 2.2% from year-ago levels to $337,100.

Single-family home sales were up 3.7% to a seasonally adjusted annual rate of 5.88 million in February from 5.67 million in January. Compared with February 2006, however, sales were down 3.4 percent. The median existing single-family home price was $211,100 in February, down 1.5%t from a year ago.

Existing condominium and co-op sales rose 5.3% to a seasonally adjusted annual rate of 810,000 units in February from 769,000 in January but remained 5.2% below February 2006. The median existing condo price was $225,400 in February, up 0.5% from a year earlier.

Total housing inventory levels rose 5.9% to 3.75 million in February, a 6.7-month supply at the current sales pace compared with a 6.6-month supply in January. Raw inventories peaked last July at 3.86 million, and supplies topped at 7.4 months in October.

The national median existing-home price for all housing types was $212,800 in February, down 1.3% from February 2006 when the median was $215,700. The NAR pointed out that other indices, including the OFHEO House Price Index, have been showing gains. But the HFHEO index measures only homes that are covered by conventional financing.

Said NAR President Pat Vredevoogd Combs of Coldwell Banker-AJS-Schmidt in Grand Rapids, Mich., "What's really happening is probably somewhere in between the different measures, but home prices are soft-a year ago we were still seeing bidding pressures and double-digit price growth," Combs said. "Overall, home prices should rise slowly this year."