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Ahead of the Bell: US home sales likely increased in February to highest level in 2 years
The number of Americans who bought previously occupied homes likely increased in February to the highest level in two years.
Economists forecast that sales increased to a seasonally adjusted annual rate of 4.6 million last month, according to a FactSet survey. The National Association of Realtors will report on February re-sales at 10 a.m. Eastern time Wednesday.
Home sales have risen nearly 13 percent over the past six months. While they are still below the 6 million that economists equate with a healthy economy, the gains have coincided with other good news in the housing market that suggests slow and steady improvement.
Homebuilders have grown more confident in the past six months after seeing more people express interest in buying a home. In February, they requested the most permits to build homes since October 2008.
Mortgage rates are near record lows. And the supply of homes fell in January to its lowest level in seven years.
A lower supply helps push up prices, which lures more sellers onto the market and generally improves the quality of homes for sale. Rising prices also boost sales because buyers want to invest in homes that are appreciating in value.
For the past few years, the market has been saturated for years with foreclosures. That has put downward pressure on prices and driven away buyers.
A key reason for the brighter housing outlook is the job market has strengthened. From December through February, employers added an average of 245,000 jobs a month. The unemployment rate has fallen to 8.3 percent, the lowest in three years.
Still, economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering.
Fewer first-time buyers, who are critical to a housing recovery, are in the market for a home. They made up roughly one-third of sales last year. In healthy markets, the percentage is at least 40 percent.
Many can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling.
Sales are measured when buyers close on homes. Some deals have been scuttled before the closing after banks declined mortgage applications, home inspectors found problems, appraisals showed a home was worth less than the bid, or a buyer lost a job.
The high rate of foreclosures has made resold homes cheaper than new ones. The median price of a new home is roughly 30 percent above the price of one that's been occupied before ' twice the normal markup. Investors are taking advantage of the discounts.