Home sales beat January numbers in U.S. and state

Sales of existing U.S. homes rose 2.9% in February from January -- the first increase since July -- and California posted a 9.5% rise in sales, reports Monday showed.

But many analysts said it was too soon to know whether the prolonged slide in housing had ended. And they noted that prices were down sharply.

The National Assn. of Realtors said sales of existing homes nationwide reached a seasonally adjusted annual rate of 5.03 million units last month, compared with 4.89 million in January.

It marked the first sales gain since July. But even with the increase, sales were 24% below their level a year earlier.

Prices continued to slide. The median sales price for single-family houses and condominiums dropped to $195,900, a fall of 8.2% from February 2007 -- the biggest year-over-year decline the current housing slump has seen.

For sales, “the hemorrhaging has stopped, but the recovery will be long, slow and painful,” said Bernard Baumohl, managing director of the Economic Outlook Group. “It’s unlikely that we will see any sustained jump in home purchases, must less higher prices, until mid-2009 at the earliest.”

In California, sales were down 28.5% in February from a year earlier to a seasonally adjusted annual rate of 343,220. The median price was off 26% at $409,240, as tighter mortgage standards made it harder to obtain financing, the California Assn. of Realtors said.

The state’s median price was down 4.8% compared with January’s revised median of $429,790, the group said.

In the Los Angeles area, February sales volume crashed 41.8% from a year earlier, but with a decline of 20%, home prices held up better than the state at large.

The U.S. housing market’s free fall and a credit crisis touched off by rising mortgage defaults have probably tipped the economy into a recession that could prove severe if tight financial market conditions do not ease, many economists believe.

In a separate report, the Chicago Federal Reserve Bank said its index of U.S. economic activity slipped to minus-1.04 in February, the lowest reading since April 2003. The drop pushed a three-month average of the index deeper into territory that can signal recession.

“There is an increasing likelihood that a recession has begun,” the Chicago Fed said.

The pickup in sales of existing homes helped cut into the bloated inventory of unsold properties on the market. The Realtors group said U.S. inventory fell 3% to 4.03 million units at the end of February. At February’s sales pace, that represented a 9.6-month supply, the slimmest inventory since August but still high by historical standards.

“That’s not much of an improvement in inventory,” said Gregory Miller, economist at SunTrust Banks in Atlanta. “As long as bank lending standards stay as tight as they have been, it will be a long correction process.”

In terms of regional data, sales decreased 1.1% in the West from January but were up 11.3% in the Northeast, 2.5% in the Midwest and 2.1% in the South, NAR said.