Existing home sales slip in February

NEW YORK (CNNMoney.com) -- Sales of existing homes fell slightly in February, according to an industry report released Tuesday, a sign that the housing market's recovery remains fragile.

The National Association of Realtors reported that home resales fell 0.6% last month to a seasonally adjusted annual rate of 5.02 million units. That's down from a rate of 5.05 million in January. Still, sales are 7% higher than in February 2009, when homes were going into contract at an annual rate of 4.69 million units.

Last month's figures came in slightly above analyst expectations. Consensus estimates had forecast an annual rate of 5 million units, according to Briefing.com.

"Some closings were simply postponed by winter storms, says Lawrence Yun, NAR's chief economist, "but buyers couldn't get out to look at homes in some areas and that should negatively impact near term contract activity."

Yun added that sales have been higher on a year-over-year basis for eight straight months.

Analysts are hoping sales will pick up as the April 30 deadline for the new homebuyer tax credit closes in.

In November, Congress extended and expanded an $8,000 tax credit for first-time homebuyers, which also allows some repeat buyers to qualify for a $6,500 credit.

"We saw [an increase] in home buying figures in November" when consumers thought the credit was going away, said Carl Riccadonna, senior U.S. economist for Deutsche Bank.

But this time around, Riccadonna doesn't necessarily expect a "rush to the realtors."

A separate NAR survey found that first-time homebuyers purchased 42% of homes in February, compared to 40% in January. Investors made up 19% of transactions, compared to 17% in January. Overall buyer traffic improved by 12% in February, NAR said.

Sales of distressed properties, including foreclosures and short sales, made up 35% of sales last month, compared to 38% in January.

Prices and inventory: NAR's report showed that the median price of homes sold in February was $165,100, down 1.8% from February 2009.

Total existing homes on the market jumped 9.5% in February to 3.59 million units, representing an 8.6-month supply of homes unsold, up from a 7.8 month supply in January. NAR's Yun attributed some of the increase in inventory to the number of distressed homes coming to market.

Sales by property type: Sales of single-family homes dipped 1.4% to a seasonally-adjusted annual rate of 4.37 million units in February, compared to 4.43 million units in January.

Existing condos and co-op sales fared better, rising 4.8% to a seasonally adjusted annual rate of 650,000 in February, from 620,000 in January. Sales for existing condos and co-ops are up 30.3% from February 2009.

Sales by region: The Midwest fared the best of all, according to NAR. The region saw existing home sales jump 2.8% in February to an annual rate of 1.11 million units, which was 8.8% higher than last year.

The Northeast also saw slight improvement in existing homes sales, which rose 2.4% to an annual pace of 840,000 for the month. Sales are up 12% from last year.

The Western region of the country fared the worst, with existing home sales falling 4.7% to an annual rate of 1.22 million units in February. Still, sales are up 3.4% from last year.

Existing home sales in the South dipped 1.1% to an annual rate of 1.85 million units in February, but were up 6.9% from a year ago.

Outlook: The housing market this year will struggle to balance a gradual recovery of demand with glut of inventory, according to Deutsche Bank's Carl Riccadonna.

While February's declines are worrisome, he stressed that this time of year is a trickle for homebuying, since the true judge of the health of the market will come during peak homebuying season this spring.

But even then, all eyes will be on jobs, the most definitive sign of economic recovery. "The best housing recovery plan is a strong labor market," said Riccadonna. "That's the rising tide that lifts all boats."