Existing-Home Sales Dive, Prices Near Nine-Year Low

February Drop Snaps Three Straight Months of Gains; Largest Decline Since July

From Reuters/MSN.com: WASHINGTON — Sales of previously owned U.S. homes fell unexpectedly sharply in February and prices fell to their lowest in nearly nine years, an industry group said Monday.

The National Association of Realtors said sales fell 9.6 percent month over month to an annual rate of 4.88 million units, snapping three straight months of gains. The percentage decline was the largest since July.Economists polled by Reuters had expected February sales to fall 4.0 percent to a 5.15 million-unit pace from the previously reported 5.36 million unit rate in January, which was revised slightly up to 5.40 million.

Compared with February last year, sales were down 2.8 percent.

The median home price dropped 5.2 percent in February from a year earlier to $156,100, the lowest since April 2002.

“Housing remains weak with a soft employment backdrop and difficult credit,” said Tom Porcelli, chief U.S. economist for RBC Capital Markets. “Other details in the report were equally sobering, with home prices falling and supply jumping. At the risk of sounding like a broken record, we should not expect much from housing this year due to the ongoing imbalance in supply and demand. We expect another 5-10 percent drop in home prices over the next year and housing will remain a drag on overall growth.”

“This is a frustrating number,” said David Carter, chief investment office at Lenox Advisors. “The U.S. residential real estate market doesn’t seem to want to turn around despite better affordability. Government rebates may have distorted the market, and we need to work through inventory. I think recovery can be anticipated given affordability, though employment must improve.”

Copyright 2011 Thomson Reuters