Existing home sales rise marginally in February
WASHINGTON: US home resales rebounded modestly in February as a persistent shortage of properties on the market spurred the biggest price jump in a year, a trend that could undermine the spring selling season.
The National Association of Realtors said on Monday that existing home sales rose 1.2 per cent to an annual rate of 4.88 million units. That left the bulk of January's 4.9 per cent plunge intact.
"Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels," NAR chief economist Lawrence Yun told reporters. Economists had forecast home resales rising to a 4.90 million-unit pace last month.
Sluggish home sales are yet another sign that economic activity slowed sharply in the first quarter, which could further diminish expectations that the Federal Reserve will increase interest rates in June. The dollar fell against a basket of currencies, while prices for US Treasury debt were little changed.
The US housing index rose 0.33 per cent, in line with a slightly firmer stock market. Shares in the largest homebuilder, DR Horton, gained 0.25 per cent. Lennar Corp rose 0.83 per cent, while Pulte Group advanced 0.45 per cent.
Tight inventories are hurting sales by limiting the selection of houses available to potential buyers. The lack of supply is also keeping house prices high, helping to sideline first-time buyers.
Last month, the inventory of unsold homes on the market rose 1.6 per cent to 1.89 million units. Supply was, however, down 0.5 per cent from a year ago.
Inventory growth should be averaging roughly 5.6 per cent at this time of the year, when the market gets ready for the spring selling season, according to the Realtors association. The spring selling season, the busiest time of the year for housing, runs from April through August.
Realtors and economists say insufficient equity and uncertainty about the economy's strength were forcing potential sellers to stay in their homes. A recent survey by the Realtors association showed homeowners on average staying in their homes for 10 years instead of the typical seven years.
At February's sales pace, it would take 4.6 months to clear houses from the market, unchanged for a second straight month. A supply of six months is viewed as a healthy balance between supply and demand.
With supply remaining tight, the median price for a previously owned home was US$202,600 in February, up 7.5 per cent from a year ago.
That was the largest percentage gain since February last year and suggested that the pace of home price increases, which had been slowing after double-digit growth for much of 2013, appears to be reaccelerating.
"Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before (mortgage) rates rise," Yun said. Apart from tight supply, sales last month were also constrained by harsh winter weather.
Sales in the Northeast, which was slammed by storms for much of the winter, tumbled 6.5 per cent last month. Sales in the Midwest were unchanged. Sales rose 1.9 per cent in the South and jumped 5.7 per cent in the West.
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