Existing-Home Sales Rise as Prices Plummet

Gain Takes Some by Surprise

Sales of existing homes increased unexpectedly in February as bargain hunters took advantage of a bloated supply and the biggest drop in single-family-house prices in at least 40 years.

After declining for six consecutive months, home sales in February were up 2.9 percent over January but still down 23.8 percent from a year ago, according to a report released yesterday by the National Association of Realtors.

Industry experts said that the increase was good news but warned that it was far too soon to declare a turnaround in a struggling sector that has weighed heavily on the nation's economy.

"I wouldn't tag too much hope on one month's numbers," said Michael Larson, a housing analyst with Weiss Research in Jupiter, Fla., who predicted a turn in sales next year.

Still, Larson said he was "pleasantly surprised" by the numbers and was glad to see that buyers "were willing to step up to the plate."

The median sales price of existing homes in February -- including single-family houses, townhouses, condominiums and co-ops -- was $195,900, down 8.2 percent from $213,500 a year earlier. That represented the biggest drop since 1999, when the association began recording those figures.

The median price for a single-family house was $193,900, down 8.7 percent over the year, the biggest decline since 1968, when the association started keeping those records.

Sales in February were at a seasonally adjusted rate of 5.03 million units, compared with 4.89 million in January, according to the Realtors association.

More specifically, there was a 2.8 percent increase in single-family-home sales and a 3.7 percent jump for condominiums and co-ops.

At the February sales pace, there was a 9.6-month supply of homes for sale, down from 10.2 months in January.

During the most recent boom, the supply of homes for sale fell to 3.6 months, hitting that level in January 2005. About six months is considered a well-balanced supply.

Lawrence Yun, chief economist for the association, said the latest sales figures were another sign that the market was stabilizing. He forecast a turnaround in the second half of the year, when he expects the mortgage market to ease up. "The only thing that may hold the housing market back is the consumer-confidence issue," he said. "The talk of recession is hurting consumer confidence."

He said that sales have been down in the Washington area but that the region is relatively recession-proof and some people have been willing to keep their unsold homes on the market longer, confident they will eventually get an acceptable price.

He said he expected to see prices continue to fall nationwide "at least through the summer," with some markets turning around more quickly than others.

Around the nation, he said, some markets have fared far better than others in pricing. For instance, markets including Trenton, N.J., and Oklahoma City had price increases in the fourth quarter of last year, compared with sharp decreases in areas including Sacramento and Fort Myers, Fla.