Existing-home sales slipped in February but remained above year-ago levels, while home prices rose at double-digit rates, according to the National Association of Realtors®.

Total existing-home sales, including single-family, townhomes, condominiums, and co-ops, were down 0.4 percent in February to a seasonally adjusted annual rate* of 6.79 million from an upwardly revised pace of 6.82 million in January. Last month's sales activity was 6.1 percent above the 6.40 million-unit pace in February 2004.

David Lereah, NAR's chief economist, said the housing market appears to be in the early stages of settling down. "In essence, home sales were surging at unprecedented levels for most of last year," he said. "The cooling we expect in sales this year means we'll be transitioning from a white-hot housing market into a very strong market that still favors home sellers, but should become more balanced as the year progresses."

The national median existing-home price for all housing types was $191,000 in February, up 11.0 percent from February 2004 when the median price was $172,000. The median is a typical market price where half of the homes sold for more and half sold for less.

NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said there simply aren't enough homes available for sale. "The supply of homes on the market is tight, so prices continue to rise faster than historic norms," he said. "The long-term population growth and demographic trends show the fundamental demand for housing will remain historically strong going forward, so housing will continue to support the U.S. economy and will remain the soundest investment most families will ever make."

Total housing inventory levels rose 10.7 percent at the end of February with 2.38 million existing homes available for sale, which represents a 4.2-month supply at the current sales pace -- January was a record low 3.8-month supply. For a market to be fairly balanced between buyers and sellers, a supply in the range of six months is required.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 5.63 percent in February, down from 5.71 percent in January; it was 5.64 percent in February 2004.

Condominium and cooperative housing sales last month accounted for 12.5 percent of market activity. Existing condo sales slipped 1.2 percent to a seasonally adjusted annual rate* of 848,000 units in February from a record level of 858,000 units in January. Last month's sales activity was 10.4 percent above the 768,000-unit pace in February 2004. The median condo price was $210,700, up 20.5 percent from the same month a year ago.

Single-family home resales eased 0.3 percent in February to a seasonally adjusted annual rate* of 5.94 million units from a level of 5.96 million in January. Last month's sales activity was 5.5 percent above the 5.63 million-unit pace in February 2004. The median single-family home price was $188,200 in February, up 9.4 percent from a year earlier.

Regionally, total existing-home sales in the Northeast rose 4.6 percent from January to a pace of 1.14 million units in February, and were 4.6 percent above the level in February 2004. The median existing-home price in the Northeast was $251,000, up 18.4 percent from a year ago.

Existing-home sales in the Midwest increased 2.0 percent to an annual rate of 1.50 million units in February, and were 4.2 percent above a year earlier. The median price in the Midwest was $156,000, up 9.1 percent from February 2004.

The home resale pace in the West held even at an annual rate of 1.59 million units in February and was 6.7 percent stronger than February 2004. The median existing-home price in the West was $279,000, up 16.7 percent from the same month a year ago.

Existing-home sales in the South fell 3.4 percent from January to an annual rate of 2.56 million units in February, but were 8.0 percent higher than a year ago. The median price of an existing home in the South was $164,000, which was 7.2 percent higher than February 2004.

* The annual rate for a particular month represents what the total number of actual sales for a year would be if the relative pace for that month were maintained for 12 consecutive months. Seasonally adjusted annual rates are used in reporting monthly data to factor out seasonal variations in resale activity. For example, home sales volume is normally higher in the summer than in the winter, primarily because of differences in the weather and family buying patterns.

Existing-home sales, which include single-family, townhomes, condominiums, and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau's series on new single-family home sales, which are based on contracts or the acceptance of a deposit. In the count of new-home sales, a house can be in any stage of construction ranging from not started to fully complete. The count of existing-home sales is based on completed transactions in which the home usually is ready for occupancy. Because of these differences, it is not uncommon for each series to move in different directions in the same month. In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample -- nearly 40 percent of multiple listing service data each month -- and typically are not subject to large prior-month revisions that are fairly common in the new-home sales series.

Existing-home sales for March will be released April 25. The next Pending Home Sales Index will be on April 4 and the forecast will be revised April 12.

Published: March 25, 2005