Sales of previously owned U.S. houses held in February near an almost two-year high, adding to evidence the market that triggered the recession is firming.
Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010, a report from National Association of Realtors showed today in Washington. The median price increased over the past year for the first time since November 2010.
“The U.S. housing market is stabilizing and very gradually carving out a recovery,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who correctly projected the February sales rate. “Housing demand should pick up in response to falling unemployment and attractive affordability.”
Buying a house is coming within reach for more Americans as hiring picks up, incomes grow, property values steady and mortgage rates hold near record lows. The report also showed the number of houses for sale climbed in February by the most in 10 months, a reminder that foreclosures continue to loom as a headwind for the market.
Stocks dropped, led by declines among energy companies. The Standard & Poor’s 500 Index fell 0.2 percent to 1,402.89 at the close in New York. Treasury securities rose, sending the yield on the benchmark 10-year note down to 2.3 percent from 2.36 percent late yesterday.
The median forecast in a Bloomberg News survey of 77 economists projected a sales pace of 4.61 million. Estimates ranged from 4.44 million to 4.8 million. The January reading was revised up from a previously reported 4.57 million rate.
Purchases of existing homes, tabulated when a contract closes, climbed to 4.26 million last year from 4.19 million in 2010. Demand peaked at 7.08 million in 2005 during the housing boom. In 2008, sales totaled 4.1 million, the least since 1995.
Even with the decline last month, January and February sales marked the strongest start to a year since 2007.
“Business is getting better gradually,” said John Huebner, owner of Century 21 Real Estate Professionals, a brokerage with 210 sales agents in Orlando, Florida. “People are moving and houses are selling, and that’s good for us.”
More people are searching for homes online, giving his brokers more leads on sales as shoppers seek to take advantage of low interest rates and prices, Huebner said.
“If homes are priced well and in good condition, we’re seeing multiple offers,” he said.
The number of previously owned homes on the market rose by 100,000 to 2.43 million in February, today’s report showed. At the current sales pace, it would take 6.4 months to sell those houses, up from 6 months in January.
The median price climbed 0.3 percent to $156,600 from $156,100 in February 2011. It was the biggest gain since the year ended July 2010, reflecting a temporary boost in demand related to the Obama administration’s homebuyer tax credit.
A measure of housing affordability climbed in January to a record 206.1, according to the NAR’s data. A value of 100 means that a family with the national median income has enough to qualify for a median-priced property.
Today’s report showed purchases declined in two of four regions, led by a 3.3 percent drop in the Northeast. Sales in the Midwest increased 1 percent.
Distressed sales, comprised of foreclosures and short sales in which the lender agrees to a transaction for less than the balance of the mortgage, accounted for 34 percent of total demand last month, little changed from January’s 35 percent.
Home foreclosures may remain a persistent concern. Filings fell 8 percent in February, the smallest year-over-year decrease since October 2010, as lenders began working through a backlog of seized properties, RealtyTrac Inc. said last week.
“February’s numbers point to a gradually rising foreclosure tide,” Brandon Moore, RealtyTrac’s chief executive officer, said in the statement. “That should result in more states posting annual increases in the coming months.”
Federal Reserve policy makers last week said they will continue to swap $400 billion in short-term securities with long-term debt to lengthen the average maturity of the central bank’s holdings, a move dubbed Operation Twist and aimed at holding down borrowing costs like mortgage rates.