WASHINGTON - Sales of existing homes rose from January to February in an unexpected boost for the slumping U.S. housing market as buyers took advantage of deep discounts on foreclosures.
The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January. It was the largest sales jump since July 2003.
Sales had been expected to fall to an annual pace of 4.45 million units, according to Thomson Reuters.
The median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record.
February's median sales price was up slightly from January, which recorded the lowest median price since September 2002. Prices are down about 28 percent from their peak in July 2006.
In contrast with the housing boom, when buyers took out ever-riskier loans and maxed out their home equity lines, "homebuyers are not over stretching" said Lawrence Yun, the Realtors' chief economist. "They want to stay within their budget."
By summertime, sales are expected to get a boost from a $8,000 tax credit for new home buyers included in the economic stimulus package signed by President Barack Obama last month.
The number of unsold homes on the market last month rose 5.2 percent to 3.8 million, a typical increase for the winter months. At February's sales pace, it would take 9.7 months to rid the market of all of those properties, unchanged from a month earlier.
The bursting of the U.S. housing bubble has caused foreclosures to swamp the market — especially in particularly distressed states like California, Florida, Nevada and Arizona.
About 45 percent of sales nationwide are foreclosures or other distressed property sales, according to the Realtors group. Those properties typically sell for about 20 percent less than non-distressed homes.
That's great news for buyers, who are paying the most attractive prices in years. Plus, interest rates have sunk to historic lows.
The Federal Reserve last week moved to reduce already low rates by printing $1.2 trillion and pumping it into the economy through the purchases of mortgage-backed securities and Treasury debt.
The central bank also will double its purchases of debt issued by Fannie Mae and Freddie Mac to $200 billion.
