WASHINGTON, DC—Spring may have sprung officially, but existing-home sales figures released Thursday suggested that cold temperatures, literally and figuratively, are still lingering over the housing recovery. The National Association of Realtors said that sales nationally for February, including for-sale multifamily units, slipped 0.4% from the prior month and 7.1% year over year, for the slowest monthly sales pace since July 2012.
The month-over-month and Y-O-Y declines were more pronounced in the condominium and cooperative apartment sector. Existing condo and co-op sales declined 1.8% from January to an annual rate of 560,000 units, which is 8.2% below the level seen a year ago. Pricing rose Y-O-Y, though: the median existing condo price was $187,900 in February, a 9.8% gain from the same period in 2013 and a sharper climb than the 9.1% median increase overall.
Lawrence Yun, NAR’s chief economist, lays some of the blame on unusually disruptive weather conditions last month. Other factors include “the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago.”
At Sterne, Agee & Leach, chief economist Lindsay Piegza describes the housing market shown in Thursday’s NAR report as “lackluster.” It’s in keeping, she says, with indicators from earlier this week, including the Commerce Department’s report that February’s drop in housing starts marked the third consecutive monthly decline, while the National Association of Home Builders’ housing market index remained “tepid” in March at 47, the second lowest reading in 10 months.
“Going forward it will take sustainable job and income growth to propel would-be-homebuyers back into the market,” she says. “But with the labor market uneven at best, it may take some time before the housing industry regains the momentum seen earlier last year.”
It doesn’t help, says IHS Global Insights, that the inventory of distressed homes is drying up, potentially discouraging investment groups due to the rise in prices that goes in hand with fewer foreclosed properties available. The firm’s US economists, Stephanie Karol and Patrick Newport, note that spokespersons for some investment groups have gone on record lately as saying that price increases have caused them to slow down their pace of buying, although investors still accounted for 21% of the volume in February.
There was good news in February’s NAR report, however, according to Karol and Newport. “Single-family sales sped up in the areas less affected by poor weather in February, while year-on-year price growth remains strong, suggesting that markets in the West and South are quite healthy,” they write in their monthly commentary. “We anticipate that sales in the Northeast and Midwest will improve somewhat when the weather turns in March.”