Existing home sales fell again for the second month in a row, falling 0.4% to a seasonally adjusted rate of 4.6 million from 4.62 million in January, and 7.1% lower than February 2013, according to the National Association of Realtors.
February’s pace of sales was the lowest since July 2012, when it stood at 4.59 million.
"Another lackluster housing report," said Lindsey Piegza, chief economist at Sterne Agee. "Earlier this week, housing starts fell again in February, the third consecutive monthly decline and the NAHB housing market index remained tepid in March at 47, the second lowest reading in 10 months. Last month’s fallout to 46 was the largest on record.
"Industry insiders cited weather as a temporary factor impeding buying activity but many also pointed to rising borrowing costs and higher property values as longer-term factors limiting affordability and by extension housing demand," she said. "Going forward it will take sustainable job and income growth to propel would-be-homebuyers back into the market. But with the labor market uneven at best, it may take some time before the housing industry regains the momentum seen earlier last year."
Rising prices and severe winter weather caused the drop, NAR said.
Home prices grew in most of the country on limited inventory conditions. Investor demand also remained stable, comprising 1 in every 5 sales.
Additionally, NAR acknowledged the challenges for younger buyers in forming initial households, given the burden so many face with student loan debt.
“We had ongoing unusual weather disruptions across much of the country last month, with the continuing frictions of constrained inventory, restrictive mortgage lending standards and housing affordability less favorable than a year ago,” Lawrence Yun, NAR’s chief economist, said. “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.”
The median existing-home price for all housing types in February was $189,000, which is 9.1% above February 2013.
“Price gains have translated into an additional $4 trillion of housing wealth recovery over the past three years,” Yun added.
NAR President Steve Brown said student debt appears to be a factor in the weak level of first-time buyers. First-time buyers accounted for 28% of purchases in February, up from 26% in January, but down from 30% in February 2013.
“The biggest problems for first-time buyers are tight credit and limited inventory in the lower price ranges,” he said. “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 down payment identified student debt as the biggest obstacle.”
Distressed homes – foreclosures and short sales – accounted for 16% of February sales, compared with 15% in January and 25% in February 2013.
Eleven percent of February sales were foreclosures, and 5% were short sales.
Total housing inventory at the end of February rose 6.4% to 2 million existing homes available for sale, which represents a 5.2-month supply at the current sales pace, up from 4.9 months in January. Unsold inventory is 5.3% above a year ago, when there was a 4.6-month supply. The median time on market for all homes was 62 days in February, down from 67 days in January and 74 days on market in February 2013.
The national average commitment rate for a 30-year, conventional, fixed-rate mortgage declined to 4.3% in February from 4.43% in January; the rate was 3.53% in February 2013.
All-cash sales comprised 35% of transactions in February, up from 33% in January and 32% in February 2013. Individual investors, who account for many cash sales, purchased 21% of homes in February, compared with 20% in January; they were 22% in February 2013. Seventy-three% of investors paid cash in February.
Regionally, existing-home sales in the Northeast fell 11.3% to an annual rate of 550,000 in February, and are 12.7% below February 2013. The median price in the Northeast was $237,800, up 1.5% from a year ago.
Existing-home sales in the Midwest declined 3.8% in February to a pace of 1.00 million, and are 12.3% below a year ago. The median price in the Midwest was $140,900, which is 8.6% higher than February 2013. In the South, existing-home sales rose 1.5% to an annual level of 1.98 million in January, but are 0.5% below February 2013. The median price in the South was $163,400, up 8.3% from a year ago.
Existing-home sales in the West rose 5.9% to a pace of 1.07 million in February, but are 10.1% below a year ago. The median price in the West was $279,400, up 18.0% from February 2013.
Single-family home sales edged down 0.2% to a seasonally adjusted annual rate of 4.04 million in February from 4.05 million in January, and are 6.9% below the 4.34 million-unit level in February 2013. The median existing single-family home price was $189,200 in February, up 9% from a year ago.
Existing condominium and co-op sales declined 1.8% to an annual rate of 560,000 units in February from 570,000 in January, and are 8.2% below a year ago. The median existing condo price was $187,900 in February, which is 9.8% above February 2013.