Cash takes record bite out of dwindling home sales: NAR

Existing homes sales fell 9.6% in February hurt by an increasing number of contract cancellations, as all-cash sales hit a record high and distressed sales continued to climb. The National Association of Realtors said seasonally adjusted sales decreased to 4.88 million in February from 5.4 million for January, which was revised upwardly a few thousand revised. Existing sales for the month are off 2.8% from 5.02 million a year earlier. Analysts polled by Econoday were expecting February sales to decline to 5.15 million with a range of estimates from 5 million and 5.23 million. A Briefing.com survey projected existing home sales of 4.8 million for February. “Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit, and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” NAR Chief Economist Lawrence Yun said. “This tug and pull is causing a gradual but uneven recovery. Existing-home sales remain 26.4% above the cyclical low last July.” NAR said all-cash sales accounted for one-third of all sales in February, which is the highest level recorded and up from 32% in January and 27% a year earlier. Investor activity in February remained flat with a year earlier at 19% but fell from 23% in January. The median existing home price fell 5.2% from a year ago to $156,000, according to NAR, and homes sold at a discount accounted for 39% of all sales. Distressed sales rose from 37% in January and 35% a year earlier. “The decline in price corresponds to the record level of all-cash purchases where buyers – largely investors – are snapping up homes at bargain prices,” Yun said. “We’d be seeing greater numbers of traditional home buyers if mortgage credit conditions return to normal.” NAR representatives spent January meeting with mortgage lenders and regulators urging them to loosen underwriting standards. The inventory of existing homes for sale rose 3.5% in February to 3.49 million, representing an 8.6-month supply. That is up from 7.6 months worth of supply in January. NAR classifies existing home sales as completed transactions of single-family, town homes, condominiums and co-ops. Write to Jason Philyaw.