The limited inventory of homes for sale in February meant home prices rose in most of the country. But fewer people could afford to buy, so fewer homes sold.
Existing-home sales dropped 0.4% in February when the home sales pace slowed to its lowest level since July 2012, according to the NATIONAL ASSOCIATION OF REALTORS®.
“Some transactions are simply being delayed, so there should be some improvement in the months ahead. With an expected pickup in job creation, home sales should trend up modestly over the course of the year,” said NAR Chief Economist Lawrence Yun.
Home Prices Rising
The median existing-home price for all housing types in February was $189,000 — up 9.1% from February 2013.
“Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years,” Yun said.
One reason prices rose is that fewer home sellers were distressed. Only 11% of home sales were foreclosures and 5% were short sales (when the home sells for less than what’s owed on the mortgage). Compare that with last year when 25% of February sales were distressed.
Foreclosures sold for an average discount of 16% below market value in February, while short sales were discounted 11%.
It took home sellers a median of 62 days to get a contract on their home, down from 74 days in February of last year. About one third of the homes sold in February were on the market for less than a month.
What’s Holding Back Buyers?
Student debt appears to be a factor impeding younger buyers.
“The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges,” said NAR President Steve Brown. “However, 20% of buyers under the age of 33, the prime group of first-time buyers, delayed their purchase because of outstanding debt. In our recent consumer survey, 56% of younger buyers who took longer to save for a downpayment identified student debt as the biggest obstacle.”
Brown points out that there are also consumers who want to buy but can’t. “It’s clear there are other people who would like to buy a home that aren’t in the market because of debt issues, so we can expect a lingering impact of delayed home buying,” Brown added.
One group that’s not short of cash: investors.
Three-quarters of investors paid cash for the homes they bought in February. About 35% of February’s sales were all-cash transactions.
Median Existing-Home Prices Around the Country
|Median Price||Change from Feb. 2013|
|Single-family homes||$189,200|| Up 9.0%|
|Condos and co-ops||$187,900|| Up 9.8%|
|Midwest||$140,900|| Up 8.6%|
|South||$163,400|| Up 8.3%|
|West||$279,400|| Up 18.0%|