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Sales of existing homes in US up
By Lucia Mutikani |
February 25, 2011, Friday
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SALES of previously owned homes in the United States set their highest rate in eight months in January, but more than a third of purchases were distressed properties and prices hit a nearly nine-year low.
The National Association of Realtors said on Wednesday existing homes sales climbed 2.7 percent to an annual rate of 5.36 million units, marking the third straight month of gains. Economists had expected a fall to a 5.24-million-unit pace.
Foreclosures and short sales typically occur below market value and their large share of overall sales suggested further price falls ahead.
"What this shows is that there will be an ongoing adjustment to prices to the downside. Housing fundamentals are still weak," said Neil Dutta, an economist at Bank of America Merrill Lynch in New York.
The median home price fell 3.7 percent from a year ago to US$158,800, the lowest since April 2002, the Realtors' report said. This followed data on Tuesday that showed prices for single family homes tracked by Standard & Poor's/Case Shiller fell for a sixth straight month in December, and some economists warned they could fall another 25 percent.
An overhang of foreclosed properties is weighing down the housing market even as the broader economy has entered a sustainable growth path. Housing was at the core of the worst recession since the 1930s.
Sales rose even as demand for home loans slumped in January.
The NAR has been accused of overstating the rate of home sales by as much as 20 percent. While acknowledging the trade group might have overcounted sales, NAR chief economist Lawrence Yun told reporters: "I would be highly surprised if it was 20 percent."
The NAR is reviewing its data and will release benchmark revisions later this year.
The share of distressed sales last month, at 37 percent, was the highest in a year. All cash purchases made up 32 percent of transactions compared with 29 percent in December. Analysts said this partly explained why home resales had surprised on the upside, when home loan applications had dropped sharply.
"So far in February, mortgage applications have fallen, which could be reflected in resale numbers in the next report," said Yelena Shulyatyeva of BNP Paribas in New York.
Applications for home loans rebounded last week as buyers rushed to take advantage of a slide in mortgage rates in the wake of the growing unrest in the Middle East, the Mortgage Bankers Association said.
The existing home sales report also showed a shift in housing becoming more pronounced, with the growth in multi-family units outpacing single family homes.
The National Association of Realtors said on Wednesday existing homes sales climbed 2.7 percent to an annual rate of 5.36 million units, marking the third straight month of gains. Economists had expected a fall to a 5.24-million-unit pace.
Foreclosures and short sales typically occur below market value and their large share of overall sales suggested further price falls ahead.
"What this shows is that there will be an ongoing adjustment to prices to the downside. Housing fundamentals are still weak," said Neil Dutta, an economist at Bank of America Merrill Lynch in New York.
The median home price fell 3.7 percent from a year ago to US$158,800, the lowest since April 2002, the Realtors' report said. This followed data on Tuesday that showed prices for single family homes tracked by Standard & Poor's/Case Shiller fell for a sixth straight month in December, and some economists warned they could fall another 25 percent.
An overhang of foreclosed properties is weighing down the housing market even as the broader economy has entered a sustainable growth path. Housing was at the core of the worst recession since the 1930s.
Sales rose even as demand for home loans slumped in January.
The NAR has been accused of overstating the rate of home sales by as much as 20 percent. While acknowledging the trade group might have overcounted sales, NAR chief economist Lawrence Yun told reporters: "I would be highly surprised if it was 20 percent."
The NAR is reviewing its data and will release benchmark revisions later this year.
The share of distressed sales last month, at 37 percent, was the highest in a year. All cash purchases made up 32 percent of transactions compared with 29 percent in December. Analysts said this partly explained why home resales had surprised on the upside, when home loan applications had dropped sharply.
"So far in February, mortgage applications have fallen, which could be reflected in resale numbers in the next report," said Yelena Shulyatyeva of BNP Paribas in New York.
Applications for home loans rebounded last week as buyers rushed to take advantage of a slide in mortgage rates in the wake of the growing unrest in the Middle East, the Mortgage Bankers Association said.
The existing home sales report also showed a shift in housing becoming more pronounced, with the growth in multi-family units outpacing single family homes.
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