New-home sales fell in February, but prices rose


Sunlight streams through window cutouts in an unfinished home in Richmond, Va., March 23. Sales of U.S. new homes fell in February for the second straight month, a reminder that the depressed housing market remains weak despite some improvement. (Steve Helber/AP)

The pace of new-home sales fell last month even as prices jumped to their highest level since June, according to figures released Friday by the Commerce Department, capping a week of mixed housing data that showed a market with signs of recovery but still deeply in turmoil.

The agency said sales of new homes fell 1.6 percent in February from the previous month, to an annualized rate of 313,000, a figure lower than many economists had predicted.

Still, the numbers represent an 11.4 percent increase from the previous February. The median sales price of new homes sold last month rose more than 8 percent to $233,700 — the highest mark in eight months. The average sales price was $267,000, the Commerce Department said.

Friday’s numbers served as another reminder that although bright spots have emerged in certain areas of the nation’s wounded housing market, a full recovery is nowhere in sight.

On Monday, a report showed that confidence among U.S. homebuilders held steady at the highest level since 2007, and that sales expectations among builders had continued to climb. On Wednesday, new data from the National Association of Realtors showed that sales of previously owned homes dropped 0.9 percent in February to a seasonally adjusted rate of 4.59 million. The figure marked an 8.8 percent increase in sales over the previous year.

The week’s sales figures disappointed some economists and housing industry representatives who had expected more brisk sales due to historically low interest rates, an improving job market and one of the warmest winters on record. But other experts argue that the numbers point to a housing market on the mend, particularly data showing that the steep price drops of the recent past seem to have leveled off.

What remains certain is that plenty of uncertainty lies ahead.

The number of “underwater” mortgages — in which borrowers owe more than their homes are worth — stand at their highest level since 2009, according to a report released this month by CoreLogic. Currently, more than 11 million homeowners are underwater on their houses.

In addition, foreclosures that had been put on hold after reports of widespread paperwork problems have begun to move forward again in parts of the country. That new wave of foreclosures eventually should help the housing market hit bottom and begin to recover. But in the short term, such actions are likely to clog court systems, leave many borrowers in a state of limbo and flood local housing markets, at least temporarily driving down prices.

Foreclosures and short sales account for more than one-third of all existing-home sales, according to data from earlier this week.

The Obama administration and lawmakers on Capitol Hill have continued to press the independent regulator for Fannie Mae and Freddie Mac to allow the government-backed mortgage giants to undertake more “principal reductions” — lowering the loan balances for underwater borrowers.

Government officials and five major banks also finalized a landmark $25 billion foreclosure settlement in March, which won’t heal the housing market’s woes but should aid a select group of struggling homeowners and force the banks to do additional principal reductions.


NA (The Washington Post/Census Bureau)

In addition, Bank of America this week announced a “mortgage to lease” pilot program in which a small number of borrowers facing foreclosure will be allowed to relinquish ownership in their homes without penalty and remain as tenants. The initial phase will include less than 1,000 people invited by the bank to participate in markets such as Arizona, Nevada and New York.

If the program is successful, Bank of America officials said, it might be expanded to more homeowners in additional markets.

Brady Dennis is a national reporter for The Washington Post, focusing on food and drug issues.
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