Home sales up from last year, despite monthly dip

NEW YORK (CNNMoney) -- The housing market slipped slightly in February compared with a month earlier, but improved substantially compared with the prior year, according to a report issued Wednesday.

Sales of existing homes fell 0.9% to an annual rate of 4.59 million last month from 4.63 million in January, according to the National Association of Realtors. But sales were 8.8% above the pace of 4.22 million of a year ago.

The median price of homes sold was $156,600, up slightly from last February but near 10-year lows and only a modest rise from the $154,700 reached in January.

"The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market," said Lawrence Yun, NAR's chief economist.

With home prices are at their lowest point since 2002 and mortgage rates hovering near historic lows for months, buying a home is cheaper than renting in almost every part of the United States.

That has been a boost for sales, which has cut into supplies of homes available.

The national inventory has shrunk nearly in half since peaking back in July 2007, when 4.04 million homes were on the market. Inventory came in at 2.43 million units in February, a six-month supply at the current pace of sales.

"Overall, the report has to be seen as a little disappointing," said Mike Larson, a housing market analyst for Weiss Research.

With the improvement recorded by the economy in recent months and the warm winter providing a boost, more robust home sales could have been expected, he said.

Larson sees some trouble ahead. Mortgage rates are starting to move up and may rise by half a percentage point or more over the next few months, and that could cool off the market a bit.