Home Sales Rose, Prices Fell in February

After declining for 2 quarters, sales of existing homes increased in February which signals sellers willingness to adjust to market forces and lower prices. 
The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units.

The trade group reported that the median existing sales price in February fell to $195,900. The drop to $195,900 was the largest year-over-year drop on record, however the records only go back to 1999.

Regionally, sales rose by 11.3 percent in the Northeast–which reflects the completely local nature of the widely over reported real estate slump and the health of the economy in the Northeast. 

Midwest  home sales rose a modest 2.5 percent indicating steady economic performance. There was a mild 2.1 percent increase in sales in the South.

 Not surprisingly, the price inflated West saw a decline in the sales, where they dropped by 1.1 percent. But even that 1.1% dropped has surprised many in the real estate industry and economists, who were predicting a catastrophic drop.

 Overall, February’s numbers indicate an adjusting real estate market, in which prices are rationalizing and people are selling and buying based on present market conditions rather than past prices or future expectations, which is what a healthy market does.

The existing home sales numbers do not change the fact that developers of new housing are cutting back dramatically and that sales of new units haven’t kept pace with existing home sales.