February New and Existing Home Sales Take Different Tracks

Reports on the sales of both new and existing homes were released on Friday, March 23 and Monday, March 26 and they pointed in distinctly opposite directions.

The National Association of Realtors (NAR) released figures showing an unexpected surge in existing home sales for February on the heels of a strong January. NAR said that this was the highest level of sales since last April. On the other hand the U.S. Census Bureau in conjunction with the Department of Housing and Urban Development had less upbeat news in its report on new home sales for February.

The NAR report showed an increase in total existing home sales including single family residences, townhouses, condos, and coops. Sales rose 3.9 percent on a seasonally adjusted basis for an annual rate of 6.69 million units from a downwardly revised January figure of 6.44 million units. In spite of the increase which was the biggest monthly jump since March 2004, February's preliminary figures were still 3.6 percent below figures for the same month in 2006. Sales were strongest in the Northeast, up 14.2 percent over January. This was the only region posting a gain over February, 2006, up 3.4 percent.

NAR's chief economist David Lereah said the strong gain was a surprise. "Some of the rise in home sales may be from mild weather that brought out shoppers in December, but fundamentals have improved in the housing market and buyers see a window now with historically-low mortgage interest rates and competitive pricing by sellers." He warned, however, that the extremely bad weather that occurred in February may mean that closings in March will decline before rebounding later this spring.

The median price for existing homes of all types in February was $212,800, down 1.3 percent from February last year when the median was $215,700 but up from the revised January figure of $210,900.

The inventory of unsold houses was estimated at 3,748,000, an increase of 5.9 percent over January figures. At the present rate of sales this represents a 6.7 month supply. One year ago the supply was 5.2 months.

The Census and HUD data, however, showed sales of new one-family homes declined to a seasonally adjusted annual rate of 848,000 in February. This is 3.9 percent below the revised January rate of 882,000. The January figure had earlier been estimated at 937,000. The February numbers represented a drop of 18.3 percent from sales figures in February, 2006.

The median price of news houses sold in February was $250,000 and the average was $331,000. Figures for January were $243,200 and $310,100 respectively.

There were an estimated 546,000 new homes on the market in February representing an 8.1 months supply. In January there were 538,000 homes for sale, a 7.3 months supply. One year ago there were a similar number of new homes for sale - 538,000 - but because of more brisk sales this represented only a 6.4 months supply.

The strong existing house sales report boosted stock market blue chips on Friday; however the negative report on new house sales was credited with depressing the market on Monday. At mid-day the Dow was down 65 points.