Existing Home Sales fall 9.6% in February

March 23, 2011

Think we’re heading for a recovery?  Think again.  And this is WITH record low interest rates…just wait until the Fed is forced to raise interest rates because of inflation pressures.  That will cause real estate prices to fall even further, so over-leveraged houses are here to stay, and walkawaytoday.org should be your first choice as a buyer for these properties.

Sales of existing homes fell in February after three straight monthly increases. According to the National Association of Realtors, homes sold at an annual rate of 4.88 million in February, went down 9.6% from January and 2.8% lower than February 2010 sales. The dip was much worse than what was predicted. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained,” said Lawrence Yun, NAR chief economist. As the credit market tightens, the recovery road looks rocky. There is a record level of all-cash purchases as investors are making a killing of homes at bargain prices, as inventory rose to 3.49 million units… Traditional home buyers are expected to return only when mortgage credit conditions return to being normal.

Prices touched their lowest level in nearly nine years, implying a housing market recovery was still a long off. The National Association of Realtors said Monday sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July. Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.

Oversupply of homes and a relentless wave of foreclosures are pressuring prices, holding back recovery in the sector, whose collapse helped to tip the U.S. economy into its worst recession since the 1930s. Foreclosures and short sales, which typically occur below market value, accounted for 39 percent of transactions in February, up from 37 percent the prior month. All-cash purchases made up a record 33 percent of transactions in February. Sales last month fell across the board, with multifamily dwellings declining 10 percent and single-family home units dropping 10.0 percent. At February’s sales pace, the supply of existing homes on the market rose to 8.6 months’ worth from 7.5 in January. A supply of between six and seven months is generally considered ideal, with higher readings pointing to lower house prices.

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