Although existing home sales are still going strong, the February figures show a small dip in the pace of sales. The National Association of Realtors (NAR) reported that the month’s total existing home sales declined 0.9% for a rate of 4.59 million – compared to 4.63 million in January, when home sales reached a 20-month high point. Still the rate of home sales is 8.8% above 4.22 million sales generated in February 2011. The home sales figure accounts for all completed sales of previously constructed condos, townhouses, and single-family homes in a month.
Changes in Home Resales: The national median home price in February was $156,000, an increase of 0.3% compared to February 2011. Home sales improved in the Midwest and Southern states, with increases of 1.0% and 0.3% respectively. However, existing home sales declined by 3.3% in the Northeast and by 3.4% in the West. The rate of single-family home sales declined 1.0% from January, but represents an increase of 9.4% from February 2011. The rate of sales for townhomes and condos was unchanged from January 2012.
February’s total housing inventory – the number of houses on the market – rose 4.3% from the January 2012 figure to a total of 2.43 million homes. This figure represents a 6.4 month supply of homes, a slight increase from January’s 6.0 month supply, but a big improvement from the 8.6 month supply in February 2011.
Foreclosures and short sales represented 34% of the February 2012 figures, a decline of 1.0 % from January 2012 and of 5.0 % from February 2011. The number of investors purchasing homes – 23% — was unchanged from January 2012. Investment buyers accounted for 20% of purchases in February 2011.
Economic Recovery: Despite the small decline in existing home sales numbers, the NAR is optimistic about the figures and sees a positive trend in the rate of home sales. “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market,” said Lawrence Yun, the NAR’s chief economist. “Although relatively unusual, there will be rising demand for both rental space and homeownership this year. The great suppression in household formation during the past four years was unsustainable, and a pent-up demand could burst forth from the improving economy.”
Why Consumers Care: Since real estate was one of the hardest hit sectors in the recent slump, any indicators of recovery in that area are good signs for the improvement of the economy as a whole. Homes sales are also a sign of consumer confidence since people usually purchase homes only when they are feeling economically secure. Investors use figures like this to make decisions about which sectors to invest in. Sales of existing homes also create an economic ripple effect. Although resales of existing homes don’t generate construction jobs like new homes, they do generate income for realtors and home services professionals.