PMZ Real Estate Agent Michelle Zeiter, left, walks into a bank owned home she is showing to clients Maurice McJimsey, center, and Irene Mello in Stockton, Calif., Friday, March 13, 2009. The National Association of Realtors said Monday, March 23, sales of existing homes rose from January to February in an unexpected boost for the slumping U.S housing market as buyers took advantage of deep discounts on foreclosures. (AP Photo/Marcio Jose Sanchez) - AP

Home sales rise as prices decline

WASHINGTON — One month does not a recovery make. But a surprising leap in existing home sales in February was a welcome, if tentative, sign of hope that the real estate market may be stabilizing.

While sales of existing homes remain at lows not seen in more than a decade, economists were encouraged by the news, saying it reflected buyers who were taking advantage of deep discounts on foreclosures and other distressed properties. That's essential if home prices are to find their long-awaited bottom.

Prices plunged by almost 16 percent from a year ago in February and are expected to keep falling well into 2009. Tens of thousands of homes remain tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.

"The four-letter word in the housing market is 'jobs,' " said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. "If you're worried about having a job tomorrow, you're not likely to buy a home now."

Sheryl Morgan, a real estate agent in Canonsburg, Pa., about 20 miles south of Pittsburgh, recently lost two potential clients after strapped local employers cut back on pay. "Instead of selling and buying a new home, they're staying and refinancing," she said.

The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.

It was the largest monthly sales jump since July 2003, with first-time buyers accounting for about half of all transactions. Home sales activity has returned to December's levels, but still remains lower than most of last year.

Without adjusting for seasonal factors, though, sales nationwide were down more than 10 percent from a year earlier. The West was the only part of the country to show increased sales, rising nearly 24 percent from a year earlier.

February's sales figures don't reflect the new $8,000 tax credit designed to lure even more first-time buyers into the market. However, the credit has begun to attract buyers like Mindy Robbins, 30, of Billings, Mont.

Robbins, who is scheduled to close next month on a $129,000 house with three-bedroom and two baths, said, "I wanted to take advantage of the stimulus package."

Buyers like Robbins should help invigorate spring and early summer sales, but how much will depend on the overall condition of the U.S. economy.

Share This Story