The National Association of Realtors reported that, for the third time in the last four months and the sixth time in the last seven months, existing home sales fell as bad winter weather, rising property prices, and low inventory all contributed to the decline.
Sales of previously owned homes dropped to the slowest pace since July 2012, from a seasonally adjusted annual rate of 4.62 million in January to 4.60 million February, with the median price rising from $188,900 to $189,000, now up 9.1 percent from a year ago.
On a year-over-year basis, home sales are down 7.1 percent and this ranks as the steepest decline since May 2011, a time when annual comparisons were almost meaningless due to the impact of expiring home buyer tax credits the year before that artificially boosted sales.
The months of supply metric rose from 4.9 to 5.2 and more homes are being listed for sale as inventory rose from 1.88 million in January to 2.00 million in February.
Short sales and foreclosures accounted for 11 percent and 5 percent of February sales, respectively, down from a combined 25 percent share a year ago as the combination of fewer buyers (e.g., Wall St. investors) and sellers (e.g., banks with REOs to move) for this type of property continues to wane.
Interestingly, high student loan debt was cited for the ongoing drought of first-time buyers. NAR President Steve Brown noted, “The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges. However, 20 percent of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56 percent of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle.”
Once again, it’s worth pointing out that winter home sales data make for some pretty unreliable trends as actual sales are just a fraction of summer activity and upward seasonal adjustments are at extreme levels. The true nature of the U.S. housing market may not be known until well into summer since we are likely to see an unusually large bounce-back this spring due to the sever winter weather.