Bad News for the Real Estate Pessimists

Sales of existing homes unexpectedly rose last month as a warmer than usual winter boosted demand in many parts of the country, but a slack demand in some areas produced what one analyst called a "tale of two cities."

The National Association of Realtors reported Thursday that that sales of existing single-family homes and condomiums rose by 5.2 percent in February to a seasonally adjusted annual rate of 6.91 million units.

Analysts said the weather-related boost was likely to be short-lived with sales expected to slow again in coming months as rising mortgage rates further cool the housing market which has posted record sales levels for five straight years.

"Weather conditions across much of the country were unseasonably mild in January and likely were a factor in higher levels of buyer activity, which boosted sales that closed in February," said David Lereah, chief economist for the Realtors.

The Realtors have been forecasting that sales of previously owned homes would fall by about 5 percent this year compared to last year's record pace. But Lereah said he may have to revise that forecast given the unexpected strength in February.

The price of homes sold in February rose to $209,000 for the nationwide median, the point where half the homes sold for more and half for less. That was 10.6 percent above the median price in February 2006. But analysts are forecasting those double-digit price gains will also moderate this year as demand slackens.

From Breitbart.com