* Home sales slip 0.9 pct, Jan sales pace revised up
* Prices gain 0.3 pct from year-ago, first rise in a year
* Inventories pop up, data still supportive of recovery
By Lucia Mutikani
WASHINGTON, March 21 U.S. home sales fell in
February, but upward revisions to the prior month's pace and the
first yearly increase in prices in 15 months pointed to steady
improvement in the housing market.
Existing home sales fell 0.9 percent in February from
January but still notched their second highest level since May
2010, the National Association of Realtors said on Wednesday.
"We are starting to improve slowly. There is some
encouraging news, but the dramatic things that need to happen to
really turn the market around aren't there," said Mitchell
Hochberg, Principal at Madden Real Estate Ventures in New York.
Realtors say the labor market needs to strengthen
significantly and banks must ease lending conditions, which
every month result in about a third of contracts being canceled,
for a decisive recovery to take root.
Job creation has stepped up in recent months, with employers
adding a total of 734,000 jobs to their payrolls over the last
three months. However, the unemployment rate remains at a very
high 8.3 percent.
Despite the weak sales pace last month, the median home
price rose 0.3 percent from a year ago to $156,600 - the first
yearly increase since November 2010 - adding to signs of a
Data on Tuesday showed permits to build homes rose to a near
3-1/2 year high in February, and a report on Friday is expected
to show new home sales increased last month.
Some economists said smoothing out the data to account for
the extra day in February could have contributed to the surprise
drop in sales last month. Economists polled by Reuters had
expected sales to rise to a 4.62 million pace.
"Using last year's seasonal adjustment factor instead of
this leap year's, existing home sales would have actually risen
by 3.0 percent month on month to 4.77 million units," said Ellen
Zentner, an economist at Nomura Securities in New York.
The data had little impact on U.S. financial markets, though
sales prices for U.S. Treasury debt saw some flight to safety
SALES TRENDING HIGHER
Since bottoming around a 4.05 million-unit pace in July,
home resales have largely held up.
Compared with February last year, sales were up 8.8 percent
and according to JPMorgan economist Daniel Silver, the gains
were tracking a seasonally adjusted annualized rate of 30
percent so far this quarter.
"The unusually mild winter may have helped boost existing
home sales in recent months, but we do not think this is the
only factor driving up sales," said Silver.
"The upward trend in the data began before the abnormal
weather started, and we do not see a statistically significant
relationship between deviations from normal temperatures and
existing home sales during winter months."
But recovery will not be easy and mortgage rates have spiked
in recent weeks. Demand for home loans fell last week partly in
response to rising rates. Fixed 30-year mortgage rates increased
13 basis points to average 4.19 percent last week.
Sales last month were mixed, declining sharply in the
Northeast and West. They were up in the Midwest and South.
The housing market continues to be choked by a glut of
unsold properties, which are weighing down prices.
Last month, the inventory of unsold homes on the market
increased 4.3 percent to 2.43 million units - representing 6.4
months' supply, up from 6.0 months in January. These number were
not adjusted for seasonal fluctuations.
When adjusted for these variations, the months' supply edged
down to 6.5 months' worth from 6.6 months in January. A supply
of six months generally is considered ideal, with higher
readings pointing to price declines.
Inventories are well below their 4.04 million units peak in
July 2007 and in some parts of the country, which were not
severely affected by the recession, realtors are actually short
of property to sell.
"Our biggest problem is the lack of inventory," said John
Ford, owner of Ford Realty in Boston. "If the property is priced
correctly, we have bidding wars," said Ford, who operates in one
of Boston's upscale areas.
A separate report from CoreLogic showed the number of
properties in the foreclosure pipeline fell 11.1 percent to
1.6 million units in January from a year ago, representing 6
months' worth of supply.
Last month distressed properties - foreclosures and short
sales - which typically occur at deep discounts, made up a third
of overall sales last month.
Investors bought 23 percent of homes sold last month, with
first-time buyers accounting for about a third of the