Sales of previously owned homes fall 0.6% in February

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Sales of previously owned homes slipped 0.6% in February from the month prior, according to the National Assn. of Realtors in Washington.

Home sales have struggled since December, when they plunged 16.7% from the prior month, the result of lackluster activity following a surge last fall as buyers scrambled to take advantage of a federal tax credit for first-time purchases.

The tax credit of up to $8,000 for first-time buyers had an initial expiration of Nov. 30, though Congress extended it through April and expanded it to include up to $6,500 for current homeowners.

That extended credit has appeared to have little to no effect on the market to date.

Lawrence Yun, chief economist for the Realtors group, said weather played a factor in February sales.

“Some closings were simply postponed by winter storms, but buyers couldn’t get out to look at homes in some areas and that should negatively impact near-term contract activity,” he said. “Although sales have been higher than year-ago levels for eight straight months and home prices are much more stable compared to the past few years, the housing recovery is fragile at the moment.”

Previously owned homes sold at a seasonally adjusted annual rate of 5.02 million units in February, down from 5.05 million in January. That was 7% higher than the 4.69-million-unit pace of February 2009.

The national median price for all homes sold was $165,100 in February, which is 1.8% below February 2009. Distressed homes accounted for 35% of sales last month.

Inventory rose 9.5% to 3.59 million homes for sale, an 8.6-month supply at the current pace. Raw unsold inventory is 5.5% below a year ago.

“The key test for a durable recovery comes in the next few months as the tax credit deadline approaches,” Yun said. “If we see a surge in home buying comparable to last fall in the months leading up to the original tax credit deadline, then enough inventory should be absorbed to ensure a broad home price stabilization.”

-- Alejandro Lazo