US home sales up 3% in Feb, hints at turnaround

24 March 2008 16:29  [Source: ICIS news]

US housing market perhaps at turnaroundWASHINGTON (ICIS news)--US sales of existing homes rose nearly 3% in February and sharply reduced prices have begun to draw buyers back into the long-troubled housing market, a major real estate trade group said on Monday.


The National Association of Realtors (NAR) said that sales of single-family homes, townhouses and condominiums rose 2.9% in February to a seasonally adjusted annual rate of slightly more than 5m units compared with 4.89m units in January.


However, the association noted that February’s level of home sales was still nearly 24% below the 6.6m unit rate of existing home sales seen in February 2007.


NAR chief economist Lawrence Yun said the home sales upturn in February “is a sign that the market is stabilising”.


He cautioned that while the February increase is encouraging, “we’re not expecting a notable gain in existing home sales until the second half of this year”.


Yun said the decline in home prices - which have been on a downward trend matching the more or less steady fall in home sales since late 2005 - along with new increases in federal mortgage loan limits has unleashed some pent-up housing demand.


The national median existing home price was $195,000 (€126,700) in February, down 8.2% from the same month a year ago when the median price was $213,500, the association said.


“One swallow does not make a Spring,” NAR spokesman Walt Molony said, adding that “We don’t want to read too much into one month’s figures, but this certainly is a hopeful sign.”


Molony said the US housing market “will need some sustained monthly gains to demonstrate that a recovery has begun”.


Yun noted that in about half of the US metropolitan markets, home prices are beginning to edge back up. “The relationship between home prices, interest rates and income has improved to the point where buyers are more serious about making offers,” he said.


The US housing market, especially new home construction, is a major downstream consuming sector for the chemicals industry.


($1 = €0.65)

By: Joe Kamalick
+1 713 525 2653

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