Unexpected Jump in Home Sales in February

Sales of previously owned homes in the United States showed unexpected strength in February, offering a glimmer that the tumbling housing market may be searching for a bottom even as economists brace for another wave of foreclosures driven by rising job losses.
The National Association of Realtors reported on Monday that sales of existing homes rose 5.1 percent in February after a 5 percent decline in January. Home sales in the Northeast, South, West and Midwest all gained ground for February as buyers scooped up foreclosure properties.

“We are close to seeing a bottom in both new and existing home sales,” Michael T. Darda, chief economist at MKM Partners, wrote in a note to clients.

But all real estate is local, and whether the housing market has begun to finally scrape bottom remains a question of location, location, location.

Economists and real-estate experts said the worst-hit parts of the country looked like they were starting to emerge from the wreckage of the housing bust and a tide of foreclosures. Other markets like New York or Washington, where prices have not tumbled so starkly, will probably face more stagnant sales and sliding prices in the months ahead.

In the West, where home prices have dropped 30 percent from last February, homes sales rose 30 percent last month from a year earlier. In the Northeast, where housing prices have only dropped 4.8 percent, to $251,200, over the last year, sales are down 15 percent for the year. “The areas that fall the fastest are going to recover,” said Guy Cecala, publisher of Inside Mortgage Finance. “There’s going to be a floor established. Seven hundred thousand dollar houses are $250,000 — that’s what’s bringing people back into the markets.”

The Obama administration and the Federal Reserve have introduced aggressive moves to try to lower borrowing costs, keep homeowners out of foreclosure, and stem two years’ of losses in the housing market, which lies at the center of the financial crisis.

Last month, President Obama unveiled a $275 billion plan to help as many as nine million homeowners refinance or avoid foreclosure using a variety of incentives to lenders and homeowners. The administration also included an $8,000 tax credit for first-time homebuyers in the stimulus package.

And last week, the Federal Reserve, which has already cut overnight interest rates to nearly zero, announced it would buy some $1 trillion in government debt and mortgage-backed securities in an effort to chip away at mortgage rates.

The nationwide average for a 30-year fixed mortgage is 5.08 percent compared with 5.62 percent a year ago, according to Bankrate, and many lenders are offering loans with interest rates near 4.75 percent.

The Realtors’ group reported that the median home price in February was $165,400, slightly higher than a revised $164,800 in January, but down 15 percent from a year ago. Median home prices peaked at $230,100 in July 2006. Source: nytimes.com

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