Existing home sales continued to climb in February, further evidence of a continuing recovery in the housing market.
Home sales rose 0.8% in February from January to a seasonally adjusted annual rate of 4.98 million, 10.2% above last year’s level, the National Association of Realtors said Thursday.
The sales rate was the highest since November 2009 when a federal tax credit was propping up home sales.
January’s sales rate was also revised up to 4.94 million.
Total inventory, which had been dropping for months, rose 9.6% at the end of the February to 1.94 million homes for sale, a 4.7-month supply at the current sales pace. That’s up from 4.3 months in January.
Listed inventory was 19% below a year ago and the supply is especially tight in certain areas of the country, such as in the West. With limited supply, bidding wars have broken out as buyers have little to choose from and agents have little to sell.
But last month’s inventory expansion was a strong one, says Jed Kolko, economist for website Trulia.
Inventory has been tightening because construction levels are still low, adding little new housing stock, and homeowners are waiting to sell until they have more positive equity, Kolko says.
He says inventory is likely to rise now through the summer because of seasonality, bringing some relief to buyers and helping boost sales. The February jump “is an early hint that the inventory crunch may finally be easing for good,” Kolko says.
Another issue is credit conditions, which remain too restrictive, says Lawrence Yun, NAR chief economist.
Interest rates have also edged up, climbing recently to an average of 3.82% for a 30-year-fixed rate loan, a seven-month high, the Mortgage Bankers Association said Wednesday.
But rates are still low and, along with job growth and pent-up demand, are helping to fuel stronger home sales.
For February, sales of distressed homes — foreclosures and short sales — accounted for 25% of sales, down from 34% a year ago.
Homes were on the market for a median of 74 days, 24% below year-ago levels, NAR says.
The association said the national median price for existing homes rose 11.6% from a year ago to $173,600. The February gain was the strongest since November 2005 when the median was 12.9% above a year earlier.
In a separate report Thursday, the Federal Housing Finance Agency — the regulator for mortgage-finance giants Fannie Mae and Freddie Mac — said home prices rose 0.6% from December to January. For the 12 months ending in January, prices rose 6.5%.
More up-to-date data from real estate website Zillow shows home values rose for the 16th straight month in February, up 0.1% from January and up almost 6% year-over-year.
All 30 of the largest metro areas covered by Zillow registered both monthly and annual appreciation.
“The housing market recovery has continued to gain momentum over the past several months and looks firmly entrenched as we enter the 2013 spring home shopping season,” says Zillow economist Stan Humphries.
Rising prices will “help cure” many of the ills facing the market, including big numbers of underwater homeowners. As prices rise, more homeowners will list homes for sale, which will ease supply constraints, Humphries says.
A shortage of homes for sale, especially in the lower price ranges, hurt California home sales in February, the California Association of Realtors says.
Sales of existing single-family homes there dipped 0.9% for the month from January and were down almost 6% from a year ago, CAR says.
Still, sales of single-family homes priced above $500,000 were up 31% year-over-year. Meanwhile, sales of homes below $300,000 were down 27% year-over-year, CAR says.
Fewer sales of distressed homes, including short sales and foreclosures, are expected as the foreclosure crisis recedes, says Patrick Newport, IHS Global Insight economist. Meanwhile, more regular sales will increase.
Newport expects existing home sales to come in this year at about 5 million. In a healthy market, sales would be close to 6 million, he says.
“The market is slowly picking up but it’s not a great one,” Newport says