Northeast Existing-Home Sales Fall More Than Six Percent in Feb.

John Jordan | April 1, 2015

WASHINGTON—Existing-home sales increased modestly in February, but constrained inventory levels pushed price growth to its fastest pace in a year, the National Association of Realtors reported on March 23.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, rose 1.2% to a seasonally adjusted annual rate of 4.88 million in February from 4.82 million in January. Sales were 4.7% higher than a year ago and above year-over-year totals for the fifth consecutive month.

The median existing-home price for all housing types in February was $202,600, which was 7.5% above February 2014. This marks the 36th consecutive month of year-over-year price gains and the largest since last February (8.8%).

Lawrence Yun, NAR chief economist, said that although February sales showed modest improvement, there’s been some stagnation in the market in recent months. “Insufficient supply appears to be hampering prospective buyers in several areas of the country and is hiking prices to near unsuitable levels,” he said. “Stronger price growth is a boon for homeowners looking to build additional equity, but it continues to be an obstacle for current buyers looking to close before rates rise.”

Yun added, “Severe below-freezing winter weather likely had an impact on sales as more moderate activity was observed in the Northeast and Midwest compared to other regions of the country.”

Total housing inventory at the end of February increased 1.6% to 1.89 million existing homes available for sale, but remained 0.5% below a year ago (1.90 million). For the second straight month, unsold inventory is at a 4.6-month supply at the current sales pace.

According to Freddie Mac, the average commitment rate for a 30-year, conventional, fixed-rate mortgage in February slightly rose to 3.71% from 3.67% in January, marking the first monthly increase since September 2014.

“With all indications pointing to a rate increase from the Federal Reserve this year—perhaps as early as this summer—affordability concerns could heighten as home prices and rents both continue to exceed wages.”

—NAR Chief Economist Lawrence Yun

“With all indications pointing to a rate increase from the Federal Reserve this year—perhaps as early as this summer—affordability concerns could heighten as home prices and rents both continue to exceed wages,” Yun said.

A NAR study released last month found that the disparity between rent and income growth is widening in metro areas throughout the country and is making it harder for renters to become homeowners.

The percentage share of first-time buyers was 29% in February, up from 28% in January and the first increase since November 2014. First-time buyers represented 28% of all buyers in February 2014.

All-cash sales were 26% of transactions in February, down from 27% in January and down considerably from a year ago (35%). Individual investors, who account for many cash sales, purchased 14% of homes in February, down from 17% last month and 21% in February 2014. Sixty-seven percent of investors paid cash in February.

Distressed sales—foreclosures and short sales—were 11% of sales in February, unchanged for the third consecutive month and down from 16% a year ago. Eight percent of February sales were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 17% below market value in February (15% in January), while short sales were discounted 15% (12% in January).

“Investor sales are trending downward due to the continued rise in prices and fewer bargains available from distressed properties coming onto the market,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, AK. “Furthermore, Realtors in areas popular to foreign buyers, such as South Florida and the West Coast, are reporting tempered demand from international clients—who typically pay in cash—due to the strengthening U.S. dollar compared to foreign currencies.”

Properties typically stayed on the market for 62 days in February, down from 69 days in January and unchanged from a year ago. Short sales were on the market the longest at a median of 120 days in February, while foreclosures sold in 58 days and non-distressed homes took 61 days. Thirty-four percent of homes sold in February were on the market for less than a month.

Single-family and Condo/Co-op Sales

Single-family home sales increased 1.4% to a seasonally adjusted annual rate of 4.34 million in February from 4.28 million in January, and were 5.9% above the 4.10 million pace a year ago. The median existing single-family home price was $204,200 in February, up 8.2% from February 2014.

Existing condominium and co-op sales were at a seasonally adjusted annual rate of 540,000 units in February, unchanged from January, but 3.6% below February 2014 (560,000 units). The median existing condo price was $190,200 in February, which was 2.8% higher than a year ago.

Regional Breakdown

February existing-home sales in the Northeast dropped 6.5% to an annual rate of 580,000, but were still 3.6% above a year ago. The median price in the Northeast was $241,800, which was 3.3% above a year ago.

In the Midwest, existing-home sales were at an annual level of 1.08 million in February, unchanged from January and 4.9% above February 2014. The median price in the Midwest was $152,900, up 8.8% from a year ago.

Existing-home sales in the South increased 1.9% to an annual rate of 2.11 million in February and were 6.0% above February 2014. The median price in the South was $177,900, up 8.5% from a year ago.

Existing-home sales in the West climbed 5.7% to an annual rate of 1.11 million in February, and were 2.8% above a year ago. The median price in the West was $290,100, which was 4.2% above February 2014.

John Jordan
Editor, Real Estate In-Depth