WASHINGTON - U.S. sales of previously owned homes rose in February to their fastest pace in more than three years, and more people put their homes on the market, the National Association of Realtors said Thursday.
Sales increased 0.8 percent in February from January to a seasonally adjusted annual rate of 4.98 million. That was the fastest sales pace since November 2009, when a temporary home buyer tax credit spurred sales. The February sales pace was also 10.2 percent higher than the same month a year ago.
“Home sales are trending up at a moderate rate rather than at a rapid rate,” said Michael Moran, chief economist at Daiwa Capital Markets America Inc. in New York. “The inventories are said to be tight in many markets, and that’s holding sales back to a degree.”
Steady hiring and near record-low mortgage interest rates have helped drive up sales and prices in many markets. The Realtors’ group said the median price for a home sold in February was $173,600. That’s up 11.6 per-cent from a year ago.
More people also are starting to put their homes on the market, which could help sales in the coming months. The number of homes for sale rose 10 percent last month, the first monthly gain since last April. Even with the gain, the inventory of homes for sale was 19 percent below a year ago. The number of homes on the market also tends to increase in the spring months.
Jeff Kolko, chief economist at Trulia, said the increase in houses for sale is a good sign. It suggests more homeowners are gaining confidence in the recovery. That could end an inventory squeeze that has held back sales in many markets.
“Tight inventory has been a critical issue for the housing market. The limited supply of homes has fueled bidding wars and has meant that buyers have little to choose from and agents have little to sell,” Kolko said.
By region, sales of previously owned homes were up 2.6 percent in the South and the West. Sales fell 3.1 percent in the Northeast and 1.7 percent in the Midwest, possibly in part because of adverse weather.
Even with the gains, sales nationally remain below the 5.5 million that economists associate with healthy markets.
One concern is that first time buyers, who are critical to a sustainable housing recovery, are hesitant to enter the market. They made up only 30 percent of sales in February. That’s well below the 40 percent typical in a healthy market.
Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would be buyers unable to qualify for super-low mortgage rates. First-time buyers have been hit particularly hard by the changes.
The average rate on the 30-year fixed rate mortgage dropped in November to 3.31 percent, the lowest on records dating back to 1971, and it has remained near that record low this year. This week the rate on the 30-year loan was 3.54 percent.
Rising demand and short supplies have encouraged builders to increase construction. U.S. builders started more houses and apartments in February and received building permits for future construction at the fastest pace in 4½ years.
Lennar Corp., the third-largest U.S. home builder by revenue, said orders rose in the fiscal first quarter.
“Current market conditions are driven by strong demand resulting from low interest rates and attractive home prices, which have led to very affordable monthly payments, compared to increasing rental rates,” Chief Executive Officer Stuart Miller said in a statement Wednesday. New orders, deliveries and backlog have “shown strong increases,” he said.
The increases meant that builders broke ground on homes last month at a seasonally adjusted annual rate of 910,000, the second-fastest pace since June 2008.
Applications for building permits rose 4.6 percent to 946,000, the highest level since June 2008.
KB Home, the best-performing U.S. home builder stock this year, reported a narrower loss for its fiscal first quarter as sales and prices climbed.
The net loss for the three months ended Feb. 28 was $12.5 million, or 16 cents a share, compared with $45.8 million, or 59 cents, a year earlier, the Los Angeles-based company said Thursday in a statement. Analysts expected a loss of 22 cents a share, the average of 17 estimates compiled by Bloomberg.
KB Home said it has been able to increase prices as it focuses on land-constrained markets with higher-income households and greater demand for larger houses.
“We have created momentum in our growth trajectory and we now want to take it up even further,” Jeffrey Mezger, president and chief executive officer, said in a conference call with analysts Thursday. “With markets now recovering at an accelerated pace, it is the right time to really push the accelerator on growth.”
KB Home shares increased 2.5 percent to $22.10 at the close in New York. It was the only stock with a gain in the 11-member Standard & Poor’s Supercomposite Homebuilding Index, which slipped 2 percent. Information for this article was contributed by Martin Crutsinger of The Associated Press and by Jeanna Smialek and Prashant Gopal of Bloomberg News.
Front Section, Pages 1 on 03/22/2013