February Existing Home Sales Down in the Northeast
Blame the weather – again. Existing home sales in the Northeast were less than impressive in February.
Sales of existing homes in the U.S. saw a modest increase in February, according to a new report from the National Association of Realtors. The NAR report also found low inventory continued to boost home prices, and the Northeast was the only region in the U.S. to experience a drop in sales activity.
NAR’s measurement of existing home sales covers transactions on single-family homes, condos, townhomes, and co-ops that have been previously owned.
Here are some highlights from the NAR’s report:
• Existing home sales rose 1.2 percent to a seasonally adjusted rate of 4.88 million in February. In January, there were 4.82 million existing home sales.
• The median existing home price for all property types was $202,600 in February. This is 7.5 percent higher than the median price for homes in February 2014.
• In the Northeast, existing home sales fell by 6.5 percent to an annual rate of 580,000.
• The median price in the Northeast increased to $241,800, which is 3.3 percent higher than a year ago.
• Elsewhere, existing home sales increased 1.9 percent in the South and 5.7 percent in the West from January to February.
• In the Midwest, the rate remained unchanged with 1.08 million sales in February.
The harsh weather is partly to blame for the region’s less-than impressive February home sales, said Lawrence Yun, NAR chief economist and senior vice president of research.
“New England has seen more volatility because of the weather,’’ Yun told Boston.com in a phone interview. In addition, Yun said low inventory and strict requirements for borrowers are making it difficult for homeowners to buy properties.
“This is still a sub-par recovery,’’ said Yun. “Credit conditions are tight, builders are not producing homes fast enough, and this means slow improvements from the prior month.’’
But he also expects the New England market will see a sharp uptick in sales activity once the weather warms up.
“People have been cooped up inside for a long time,’’ said Yun. “There’s a pent-up demand for housing with people who were thinking about buying but couldn’t get out of the house.’’
Mark Fleming, chief economist with title insurance company First American, believes the housing market should be performing much better than it is based on NAR’s findings.
“It’s good that sales rose in February, but when we measure how home sales should be we think it should be more,’’ said Fleming. “The unemployment rate is falling and wages are growing, which is good stimulus for the market. The housing market should be running at a faster pace.’’
Fleming agrees that the weather played a significant role in keeping potential buyers from shopping for their piece of the American dream.
“It’s hard to go looking to for a home when you’re digging yourself out of the one you live in,’’ Fleming told Boston.com.
Fleming also believes insufficient equity is keeping most homeowners from listing their homes, which is keeping housing inventory low. He believes homeowners – who are not just looking to sell their homes but are also looking to buy new ones – are waiting for the right time to list their properties.
Homeowners with insufficient equity are less inclined to participate in the real estate market. “You can’t be a buyer if don’t have the equity to be a seller,’’ said Fleming.
With this in mind, many homeowners will wait until the right time to list their properties.
“You can see prices are rising, so time is your friend,’’ said Fleming. “In the waiting scenario, you gain equity… A price gain for an existing homeowner allows more equity to be transferred to their next house.’’
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