INSTANT VIEW-Existing home sales stronger than expected

NEW YORK (Reuters) - The pace of existing home sales in the United States rose in February to a 5.03 million-unit annual rate while prices took a record fall, a trade group said Monday.

KEY POINTS: * While February broke a six-month streak of decreasing home sales, it also saw an 8.2 percent decline in median home prices from a year ago. That drop to $195,900 was the sharpest since the trade group began keeping records in 1968. * Economists polled by Reuters were expecting home resales to fall to a 4.85 million-unit pace from the 4.89 million-unit rate for January, which remained unrevised. * The inventory of homes for sale fell 3 percent to 4.03 million units at the end of February, which represents a 9.6 months' supply at the current sales pace.

COMMENTS:

DAN PEIRCE, PORTFOLIO MANAGER, GLOBAL ASSET-ALLOCATION GROUP, STATE STREET GLOBAL ADVISORS, BOSTON:

"We saw a nice surge in mortgage applications in January, so we are seeing the echo of that in today's home figures. As far as home prices go, it reveals how consumers have to lower expectations if they want to sell their house. The regulators aggressive liquidity actions are definitely having an impact."

PIERRE ELLIS, SENIOR ECONOMIST, DECISION ECONOMICS, NEW YORK:

"It's clearly a positive indication. We got wind of this from data on pending home sales. It does seem as if we can tentatively call a bottom in existing home sales. There is price weakness, but that was a given. Some progress was made on reducing inventory. It rose last time and now it's fallen back, though not quite back to where it was.

"The success of the spring home selling season is critical to the outlook. And so far so good on the results. Getting a sense of where prices are going to wind up is critical to the pricing of mortgage-backed securities because it will affect the default rates and pricing those securities is critical to stabilizing the financial markets more definitively."

NICK BENNENBROEK, HEAD OF CURRENCY STRATEGY, WELLS FARGO, NEW YORK:

"The housing number was good news for financial markets and we did see a bounce on the dollar. But we do see continued weakness in home prices. From the point of view of trying to get past the housing slump, we should see a significant fall in prices that would lead to some renewed buying interest. And that we have seen in this report.

"On JP Morgan's revised offer for Bear Stearns, the news is certainly helping the equity markets and supporting the dollar because this means less stress on financial markets."

MICHAEL KASTNER, HEAD OF FIXED-INCOME, STERLING STAMOS CAPITAL MANAGEMENT, NEW YORK:

"We had seen nothing but downtick after downtick, month after month" so it is positive for the market. "With the combination of the uptick in the Bear Stearns bid (by JPMorgan on Monday) and the uptick in existing home sales, we can see some positive headlines in the press" that will serve to buoy the markets.

IAN LYNGEN, INTEREST RATE STRATEGIST, RBS GREENWICH CAPITAL, GREENWICH, CONNECTICUT:

"Selling more homes cheaper -- too early to call that a bottom."

GREGORY MILLER, CHIEF ECONOMIST, SUNTRUST BANKS INC., ATLANTA:

"That's not much of an improvement in inventory. Builders are slashing prices with what they got. The housing correction is not finished with prices all down 8.2 pct. This shows that it hasn't been getting any easier for people to get financing.

As long as bank lending standards stay as tight as they have been, it will be a long correction process. Maybe we will see a continued move up in homes sold if prices continue to fall, but we are coming off from historic lows. They are not going to make a dent in inventory until borrowers find financing."

MICHAEL MORAN, CHIEF ECONOMIST, DIAWA SECURITIES AMERICA, NEW YORK:

"I wouldn't view the increase in home sales in February as a signal that the housing market is bottoming; the rise it could be just random volatility. With home prices declining, I suspect that buyers will stay on the sidelines for a while and hope for better opportunities in the future. Still, it looked like the first piece of good news for a while from the housing market and in case it turns out to be a real improvement, bond prices fell in reaction to it, as you would expect."

JOSH STILES, BOND STRATEGIST AND MANAGING DIRECTOR, IDEAGLOBAL, NEW YORK:

"We don't believe that the housing market has bottomed and we don't believe that the last bad news about financial stress is behind us either, but Treasuries were overdue for a correction."

"The labour markets have been deteriorating, debt levels are high and there is a lot for sale. It will be hard to work off that (homes) inventory with that backdrop."

GARY SHILLING, PRESIDENT, A. GARY SHILLING & CO., SPRINGFIELD, NEW JERSEY:

"At this time of year, there are not a lot of sales. The seasonal adjustment on this number blows up the relatively few sales. The real number of importance is the price. Prices are declining and that's wiping out the equity of many people. People are literally under water on their houses and are walking away. We forecast a peak to through decline of 25 percent. We're not quite halfway there, but we're closing in. We've still got the bulk of the decline ahead of us if our forecast are right."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST AT FOREX.COM IN BEDMINSTER, NEW JERSEY:

"To the extent that it is not a decline, it represents a little bit of a positive for the U.S. housing market. It's much too soon to say that the housing market has reached a bottom yet. It's certainly short-term relief for the dollar and overall I think the U.S. outlook.

"But I think the big thing going on right now is that the financial sector seems to have weathered the storm of the last several weeks and I think last week was the turning point in that. What we are looking for this week is further improvement in risk appetite and that going to benefit dollar/yen and the yen crosses to a larger extent."

KURT KARL, HEAD OF ECONOMIC RESEARCH, SWISS RE, NEW YORK:

"It is clear that prices have to go down. You have the prices going down and the sales going up and the inventories going down. It is unlikely to be the bottom, but this nine to 11 month range supply is probably at least through the middle of the year, and then it will start tapering off in the second half of this year."

MARKET REACTION:

* BONDS: U.S. Treasuries slipped to a session low after the existing home sales data exceeded Wall Street forecasts. * CURRENCIES: The dollar extended its gains against the euro and yen. * STOCKS: U.S. equity indexes rose to near session highs.