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February Existing Home Sales Drop for 1st Time in 3 Months

The pace of existing home sales fell last month after increasing for three months in a row, the National Association of Realtors reported today.

February’s sales of single-family, townhomes, condominiums and co-ops dropped to a seasonally-adjusted rate of 4.88 million home sales per year - a decrease of 9.6% from the previous month, and a decrease of 2.8% from the same month a year ago.

Lawrence Yun, NAR’s chief economist, continues to express that the housing recovery will not improve evenly, but will have periods of decline mixed in the recovery.

“Housing affordability conditions have been at record levels and the economy has been improving,” Yun said, “but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers.”

“This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4 percent above the cyclical low last July.”

The national median sales price for existing homes in February was $156,100 - down 5.2% from February 2010. The high proportion of distress sales (39%) continues to bring down the median sales price.

“The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun explained. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.”

And while the average rate of 4.99% for a conventional 30-year fixed mortgage remains very affordable in February, the difficulty for many lies in getting approved for the mortgage.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers should look into loan availability as soon as they decide they want to buy.

“Despite very affordable mortgage interest rates, credit remains a challenge – buyers should check their personal credit, and mortgage availability in their area,” he said.

The national median single-family home price was $157,000 in February, down 4.2% below the price a year ago.

By region, the pace of February’s existing home sales fell 7.2% in the Northeast to an annual rate of 770,000 and are 8.3% lower than a year ago. The median existing home sales price fell the most in the Northeast - down 9.5% from the price a year ago to $230,200 in February.

In the Midwest, sales in February dropped 12.2% to an annual pace of 1.01 million homes and are 9% lower than they were a year. The median sales price of $122,000 is 5.4% lower than it was a year ago.

Sales in the South fell 10.2% to a rate of 1.84 million homes per year and remain level with the pace from February 2010. The median home price of $134,600 is 3.9% lower than from a year ago.

In the West, February home sales declined 8% to an annual pace of 1.26 million homes per year and are 2.4% below the level from a year ago. February’s median home price of $190,000 is 5.2% lower than it was a year ago.

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Tuesday, 14 July 2020

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