Existing Home Sales: Sales Slip, But Inventory and Median Price Post Improvements
March 21, 2012
Sales of all existing homes slipped 0.9% to an annual rate of 4.59 million units in February. Purchases of existing single-family homes declined 1.0% to an annual rate of 4.06 million units. Sales of existing homes fell in the Northeast (-3.3%) and West (-3.2%) but advanced in the Midwest (+1.0%) and South (+0.6%).
The share of distressed properties (foreclosures and short sales) inched down to 34% in February from 35% in January. Distressed homes made up 39% of sales in February 2011.
The seasonally adjusted inventory of unsold single-family homes edged down to 6.4-month supply in February from 6.7-month supply in January. The historical median for the inventory-sales ratio is 7.6-month supply (see Chart 3).
The median price of an existing single-family home rose 1.6% to $217,100 during February from the previous month. On a year-to-year basis, the median price of an existing single-family home has moved 0.1% in February, the first positive reading since November 2010 (see Chart 4).
The February increase in the median price is noteworthy, but the durability of the upward trend is questionable because there are a large of foreclosed homes in the marketplace and there also 11.1 million, or 22.8%, of all outstanding residential mortgages that are underwater. The supply-demand imbalance suggests that the possibility of lower home prices will remain on the radar screen in the near term.