WASHINGTON Home resales unexpectedly fell in February and the supply of properties on the market rose, underscoring the many hurdles for the housing recovery.
The National Association of Realtors said on Wednesday existing home sales slipped 0.9 percent to an annual rate of 4.59 million units last month.
However, January's sales pace was revised up to 4.63 million units from the previously reported 4.57 million units.
Economists polled by Reuters had expected sales to rise to a 4.62 million-unit sales pace last month.
"It may modestly dent the narrative we've been seeing over the past couple of weeks of bettering U.S. economic data," said John Doyle, currency strategist at Tempus Consulting in Washington.
About 33 percent of pending contracts were canceled, the NAR said. Investors bought 23 percent of homes last month, with first-time buyers accounting for about third of the transactions.
Stocks drifted lower after the housing data, while Treasury debt prices slightly extended gains.
Instant view - U.S. home resales fall:
Graphic - U.S. existing home sales:
Sales last month were mixed, declining sharply in the Northeast and West. Sales were up in the Midwest and South. Still, the report offered some signs of healing in the housing market, with the median home price rising 0.3 percent from a year ago to $156,600.
"We're not seeing any pricing power, which suggests it's still a weak market," said Gary Thayer, chief macro strategist at Wells Fargo Advisers in St. Louis. "But prices are not dropping as sharply as they were several years ago. We are seeing some signs of stability in pricing."
Data on Tuesday showed permits to build homes rose to a near 3-1/2 year high in February. However, the housing market continues to be choked by a glut of unsold properties, which are weighing down prices. The inventory of unsold homes on the market increased 4.3 percent to 2.43 million units last month. At February's sales pace, that represented 6.4 months' supply, up from 6.0 months in January. A supply of six months generally is considered ideal.
Distressed properties, foreclosures and short sales, which typically occur at deep discounts, made up a third of overall sales last month.