February existing home sales rise for first time in 7 months

Existing home sales rose 2.9% in February 2008 to a seasonally-adjusted annual rate of 5.03 million units, the National Association of Realtors announced Monday. Economists surveyed by Bloomberg News had expected February 2008 existing home sales to total a 4.85 million unit annualized rate.

Sales are down 23.8% compared to a year ago. Meanwhile, inventories fell 3% to 4.03 million units, which represents a 9.6-month supply at the current sales pace.

The median sales price also plummeted by 8.2% compared to a year ago, to $195,900. February 2008 sales by region were as follows: Northeast, up 11.3%; Midwest, up 2.5%, South, up 2.1%, and the South, down 1.1%.

February 2008 sales of single-family homes rose 2.8%, while condo sales rose 3.7%.

Housing Sector Analysis: For a change, a good monthly existing home sales report. Sales did not rise dramatically, but the important point is that unit sales did not decline substantially in February 2008 either, and it's likely lower home sale prices are beginning to stimulate modest demand. Still, a word of caution to potential home buyers in the United States: median home sales prices are likely to continue to decline through at least Q3 2008. One month's rise in existing home sales is not nearly enough to suggest a trend, and inventories are likely to continue to rise given current foreclosure trends, and due to the approaching spring/summer period when many families planning to move list homes for sale.