NEW YORK (Reuters) - The pace of sales of existing home in the U.S. rose 5.1 percent in February to a 4.72 million-unit annual rate, rebounding from the previous month’s drop, the National Association of Realtors said on Monday.
KEY POINTS: * Economists polled by Reuters were expecting home resales to slip to a 4.45 million-unit pace, from the 4.49 million rate initially reported for January, which was unrevised. February’s sales increase was the largest since July 2003. * The inventory of existing homes for sale rose 5.2 percent to 3.80 million from the 3.61 million overstock reported in January. * The median national home price declined 15.5 percent from a year ago to $165,400. That was the second biggest decline on record.
JACK ABLIN, CHIEF INVESTMENT OFFICER, HARRIS PRIVATE BANK,
“This is great news, this is going help get all that inventory off the books of troubled owners.
“The one thing that we have to be careful about is while we see on the surface there’s 11 or 12 month supply of unsold inventory there’s probably this latent inventory that is not for sale right now as homeowners feel they may start to dump if the market improves. We’ll have to see how this plays out but there could be some existing homeowners that if they see the market pick up will start to dump their inventory into -- so that could put possibly a little additional pressure on prices.”
JAY MUELLER, PORTFOLIO MANAGER, STRONG CAPITAL MANAGEMENT INC,
MENOMONEE FALLS, WISCONSIN:
“I think it’s probably a mistake to get too excited about (the rise in home sales). It’s always nice to have a little bit of good news but I strongly suspect that we haven’t seen the bottom of the housing market yet.
“Forty-five percent of it apparently was distressed property so foreclosure activity is causing a certain amount of transaction volume. I’m sure there is some bargain hunting, there in some response to the drop in mortgage rates, so all those things are likely to be factors (in the rise).”
GREGORY MILLER, CHIEF ECONOMIST, SUNTRUST BANKS INC, ATLANTA,
“The truth is, there are a lot of houses being sold, not by the standards of 2005 and 2006, but there’s a lot of activity nonetheless.
“Considering the amount of assistance that the government is committed to delivering, if that does nothing else ... it’s going to restore some element of confidence in developers’ ability to market new product and it’s going to increase potential purchasers’ willingness to shop in earnest.
“The end of this fall is probably nearer rather than farther because of this government assistance.
“On top of all of that, Fed Chairman Bernanke has now made good on his commitment to reduce mortgage interest rates. The number that’s been bandied about is 4 1/2 percent and we’re just right around there. That’s not quite historic. We’ve seen other 4-1/2s in the past, but this one is also, if we believe the Fed chairman’s commitment, going to be around for a while.
“So folks are now shopping with low prices and low interest rates, assuming they meet qualifying standards, some of which will be buffered by government assistance.”
MICHELLE MEYER, ECONOMIST, BARCLAYS CAPITAL, NEW YORK:
“Certainly the existing home sales data was above expectations. But, what was surprising to me was the big jump in the Northeast as it has not been hit as hard by foreclosures. So this, as opposed to past increases, is not a foreclosure story. That was surprising to me. The fact that supply did not increase was also a good thing, but it is still very high. It is a volatile number and we need to see what happens in the next few months and see how the spring season shapes up.”
BILL EMERSON, CEO, QUICKEN LOANS, LIVONIA, MICHIGAN:
“Anytime you see an increase in existing home sales it’s good, but inventories are up as well. A lot of first-time home buyers are getting into the marketplace and they’re buying the lower priced homes. They’re looking for bargains and they’re finding them. Lower prices coupled with very low interest rates and an $8,000 tax credit are causing first-time home buyers to dive in. Inventories are up because more and more homes are still coming into the market. While it’s good to see sales go up, it’s more important to see inventories go down. When that happens, only then can you start to talk about a housing correction.”
ALAN GAYLE, SENIOR INVESTMENT STRATEGIST, RIDGEWORTH
INVESTMENTS, RICHMOND, VIRGINIA:
“The report is encouraging. It suggests that the drop in prices and mortgages rates and an increase in affordability is having an impact in the market. This is just one month’s number, so we do need to be a little skeptical. However, stabilization in the housing market is critical for the economy to start, and this is a good report.
“The Treasury’s toxic asset plan has top billing today, but ultimately the policy efforts we’ve seen over the past week has to be followed by fundamental numbers like these. Policies on their own won’t put the economy back on track. These numbers will get second billing today, but it is data like this that will put the economy back on track.”
KATHY LIEN, DIRECTOR OF CURRENCY RESEARCH, GLOBAL FOREX
TRADING, NEW YORK:
“The existing home sales report was better than expected but it is not a total surprise after the other good housing figures we had a couple of days ago. If anything, it is compounding the optimism on the recent improvement in the financial markets. As for the move in the euro, a lot of it is still technically driven after last week’s gains. Today’s price action in euro-dollar is also a result of the move in the pound versus the common currency.”
MARKET REACTION: STOCKS: U.S. equity indexes add to gains. BONDS: U.S. Treasury debt prices pare gains. DOLLAR: U.S. dollar holds gains against euro.
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