WASHINGTON (AP) - Sales of existing homes increased unexpectedly in February
after six months of decline, but private economists said it was too soon to say
that the prolonged slide in housing is coming to an end.
The National Association of Realtors said that sales of existing homes rose
by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million
units. It marked the first sales increase since last July, but even with the
gain sales were still 23.8 percent below where they were a year ago.
Prices continued to slide. The median sales price for single-family homes
homes and condomiums dropped to $195,900, a fall of 8.2 percent from a year ago,
the biggest slide in the current housing slump. The median price for just
single-family homes was down 8.7 percent from a year ago, the biggest decline in
four decades.
Wall Street, which had been expecting another decline in sales, was
encouraged by the February increase. But economists said they still believed any
sustained rebound was many months away.
"The hemorrhaging has stopped but the recovery will be long, slow and
painful," said Bernard Baumohl, managing director of the Economic Outlook Group.
"It's unlikely that we will see any sustained jump in home purchases, must less
higher prices, until mid 2009 at the earliest."
Brian Bethune, an economist at Global Insight, said, "A quick bounce back in
the housing markets is simply not in the cards."
White House press secretary Dana Perino said the increase in sales and a
decline in the inventory of unsold homes was encouraging but "we can't put a lot
of stock in just one report."
Lawrence Yun, chief economist for the Realtors, said that some formerly hot
markets in California and Florida were seeing significant price declines now as
sellers are cutting prices to attract buyers.
"We are not expecting a notable gain in existing-home sales until the second
half of this year," he said.
He said that sales should be helped in coming months by recent moves to
boost the loan limits on mortgages that can be insured by the Federal Housing
Administration and purchased by Fannie Mae and Freddie Mac.
By region of the country, sales surged by 11.3 percent in the Northeast and
were up 2.5 percent in the Midwest and 2.1 percent in the South. The only region
of the country to see a sales decline was the West, where sales dropped by 1.1
percent.
The inventory of unsold homes dipped to 4.03 million units in February. That
meant it would take 9.6 months to exhaust the supply of homes for sale at the
February sales pace. That was down from January's level of 10.2 months but still
about double what the months' supply had been during the peak of the housing
boom.
Sales of existing homes fell by 12.8 percent in 2007, the biggest decline in
25 years, following an 8.5 percent drop in 2006. After a five-year boom, the
steep downturn in housing over the past two years has been made worse by a
severe credit crunch as financial institutions tightened their lending standards
in reaction to multibillion-dollar losses on mortgages that have gone into
default.
The steep slump in housing has raised concerns about a possible recession.
Democrats are pushing for greater efforts to stem a tidal wave of mortgage
foreclosures to keep more unsold homes from being dumped on an already glutted
market.
Sen. Hillary Clinton, campaigning for the Democratic presidential nomination
in Pennsylvania on Monday, called on President Bush to appoint an emergency
working group on foreclosures to recommend new ways to confront the housing
crisis.
"Over the past week, we've seen unprecedented action to maintain confidence
in our credit markets and head off a crisis for Wall Street banks," Clinton said
in a campaign speech. "It's now time for equally aggressive action to help
families avoid foreclosure and keep communities across this country from
spiraling into recession."
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