Home Sales Unexpectedly Spike
ROBERT SIEGEL, host:
From NPR News, it's ALL THINGS CONSIDERED. I'm Robert Siegel. Some surprising news from the housing sector today: The sale of existing homes rose in February. But as NPR's Wendy Kaufman reports, it's far too early to declare a turnaround.
WENDY KAUFMAN: The sale of existing homes was up 5.1 percent in February, compared to sales the previous month. The number would translate to selling 4.7 million homes in a year. The numbers put out by the National Association of Realtors reflect the largest monthly sales increase since the summer of 2003, and better than Wall Street was expecting. But economist Patrick Newport of IHS Global Insights believes the February results are just a blip.
Mr. PATRICK NEWPORT (Economist, IHS Global Insight): I think you should not be too impressed by the numbers, because I think it was mostly driven by the weather. We had very bad weather, very colder-than-normal weather in December and in January, and warmer-than-normal weather in February. And when you have swings in the weather like that, you tend to get spikes in the housing numbers.
KAUFMAN: Prices continue to fall. A stunning 45 percent of the February sales were foreclosures or short sales, where the proceeds are less than the amount owed on the mortgage. Prices on distressed properties are typically much lower than they would ordinarily be, and those fire-sale prices push home prices down across the board. The national median home price for all existing housing types was about $165,000. That's down more than 15 percent from a year ago. Houses, says economist Newport, are now affordable.
Mr. NEWPORT: Housing is more affordable now than it's been in at least 40 years. The reason for that is because mortgage are near an all-time low and because housing prices have dropped so much. So it's a good time to buy a home.
KAUFMAN: If you have a stable job, no fear of losing it, a sizable down payment and a high credit score. For many would-be buyers, that bar is just too high. Newport says he expects job losses to continue to mount of the next few months, and thus expects housing sales to remain weak. But the National Association of Realtors has a more optimistic scenario. Walter Maloney suggests the February numbers were not just a weather-related blip. And, he says, there's an economic reason there was a five percent increase in the number of people who were looking for homes last month.
Mr. WALTER MALONEY (National Association of Realtors): The number of buyers looking at homes rose after the president signed the stimulus package and put that $8,000 first-time buyer tax credit into place. That's significant, because February, we had a 50-year low in consumer confidence, comparable bad numbers for jobs.
KAUFMAN: And yet, he continues, individuals confidant in their finances were out looking for homes to buy.
Wendy Kaufman, NPR News.
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