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U.S. Existing Home Sales Tumbled 7.1% in February

[Post Category: Industry News]

Americans retreated from home-buying in February, reversing months of prior gains as low inventories push up prices to levels that restrict sales.

The National Association of Realtors said Monday that sales of existing homes fell 7.1 percent last month to a seasonally adjusted annual rate of 5.08 million. The decline follows robust yearly sales rates of 5.47 million in January and 5.45 million in December, a new regulation delayed closings in November.

Sales of previously owned homes sank in February, a sign that demand for housing could be cooling amid rising prices and low inventory.

Sales fell 7.1% in February from the prior month to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said Monday. Economists surveyed by The Wall Street Journal had expected sales would fall 2.6% to a rate of 5.33 million in February.

The housing market enters the traditional spring buying season facing a quandary: There are relatively few properties listed for sale, even as steady job gains and low mortgage rates have bolstered demand from would-be buyers. The limited supplies have propelled rising prices that have, in turn, reduced affordability and limited sales levels. These cost pressures were further enhanced by a volatile stock market that hit down payment savings.

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“We assume the plunge in the stock market in the first six weeks of this year persuaded some potential homebuyers to reconsider, at least temporarily,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. He added that sales volumes might pick up in the spring.

The median home sales price was $210,800 in February, a 4.4 percent annual increase from a year ago.

Tight supplies have driven the increases in home prices, forcing buyers to bid more for hotly contested homes.

Listings in February fell 1.1 percent from a year ago. Many homeowners are hesitant to sell, since they would need more equity to cover the down payment for stepping up to a new property. Investors have also turned homes into rentals, further depriving the market of supplies.

The Realtors have forecast that overall sales levels will be nearly unchanged this year, after a 6.5 percent gain in 2015. But median sales prices are forecast to rise 4 percent, meaningfully faster than wages.

Home-buying fell sharply in the Northeast and Midwest last month, while slipping less severely in the South and West.

Investors accounted for 18 percent of sales in February. First-time buyers made up 30 percent of purchases, staying persistently below their historic share of 40 percent.


   

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