WASHINGTON –Sales of previously owned properties grew last month to the highest level in more than three years and
more people put their properties up for sale, signs the improving housing market will lift the economy this year.
Existing-home sales increased 0.8% in February from a month earlier to a seasonally adjusted annual rate of 4.98
million, the National Association of Realtors said Thursday. Sales were 10.2% above the same month a year earlier, the
20th straight month of year-over year gains.
After contracting since last July, the number of homes on the market has started to increase as home sales grow and
prices recover. The inventory of previously owned homes listed for sale at the end of February increased 9.6% from
January to 1.94 million.
That represented a 4.7 month supply at the current sales pace, up from 4.3 months a month earlier. Homes, meanwhile,
are selling faster. It took a median 74 days for homes to be sold in February, compared with 97 days last year, the
Realtors group said.
Lawrence Yun, the Realtors’ chief economist, predicted that the housing market’s recovery would cause consumers to
feel better about their household wealth and feel more comfortable making purchases. Extra spending resulting from
consumers’ “housing wealth” is likely to offset some of the negative impact to the economy from federal budget cuts, Mr.
Yun said.
The monthly results matched analysts’ forecasts. Economists surveyed by Dow Jones Newswires had forecast sales would
rise by 1.6% from the originally reported January figure to a pace of 5.0 million. The previous month’s figures were
revised upward to a reading of 4.94 million.
The median price of homes sold in February was $173,600, up 11.6% from a year earlier. Compared with a month earlier,
sales grew in the South and West but fell in the Northeast and the Midwest.
Many economists believe the housing market will be one of the main drivers of the economy this year as inventory
shrinks, prices rise and builders break ground on more projects. Single-family housing starts were at a nearly five-year
high in February and were up more than 30% from the same period last year, the Commerce Department said earlier this
week.
Residential investment has boosted overall economic growth for seven consecutive quarters, adding 0.40 percentage
point to overall economic growth in the fourth quarter of last year — a period in which the economy grew by 0.1%.
Earlier Thursday, the Federal Housing Finance Agency said home prices rose 0.6% in January and were up 6.5% from a
year ago. The index uses the prices of houses purchased with mortgages backed by the government-controlled Fannie Mae
(FNMA) and Freddie Mac (FMCC).
As home prices rise, the number of people who owe more on their mortgages than their homes are worth is declining,
which could encourage them to sell their homes and buy new properties. On Wednesday, Federal Reserve Chairman Ben
Bernanke said the central bank’s easy-money policies are helping the housing recovery gain traction.
“To some extent, monetary policy by strengthening the housing market–helping support house prices–is bringing more
people into the mortgage market,” Mr. Bernanke said.
On Wednesday, the Fed kept intact its easy-money policies and said it would leave its benchmark interest rates near
zero until the unemployment rate falls significantly more.
Write to Alan Zibel at alan.zibel@dowjones.com and Sarah Portlock at sarah. ortlock@dowjones.com
(CORRECTION: This story was corrected at 10:14 a.m. EDT because in the original, the revised number for January
monthly sales in the table was incorrect. January monthly supply was revised to 4.3 months, not 4.2.)
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