After six months of decline, we saw a rise in home sales of existing homes in February but private economists said it was too soon to say the prolonged slide in housing is coming to an end.
Existing home sales rose by 2.9 % in February to a seasonally adjusted annual rate of 5.03 million units, reported The National Association of Realtors. It marked the first sales increase since last July, but even with the gain sales were still 23.8 % below where they were a year ago.
The biggest slide in the current housing slump was the median sales price for single-family homes and condominiums which dropped to $195,900, a fall of 8.2 % from a year ago, The biggest decline in four decades was the median price for just single-family homes which was down 8.7 % from a year ago,
On Monday, the Dow Jones Industrial average rose 187.32 points to close at 12,548.64. Wall Street, which had been expecting another decline in home sales, was encouraged by the February increase as well as improved terms for Bear Stearns stockholders in the sale of that company to JPMorgan Chase & Co.
However, economists still believed any sustained housing rebound was many months away.
"A quick bounce-back in the housing markets is simply not in the cards." Said Brian Bethune, an economist at Global Insight, said.
Some formerly hot markets in California and Florida were seeing significant price declines now as sellers are cutting prices to attract buyers, said Lawrence Yun, chief economist for the Realtors. He also said they are not expecting a notable gain in existing-home sales until the second half of this year.
He said sales should be helped in coming months by recent moves to boost the loan limits on mortgages that can be insured by the Federal Housing Administration and purchased by Fannie Mae and Freddie Mac.
Sales rose by 11.3 % in the Northeast and were up 2.5 % in the Midwest and 2.1 % in the South. The only region of the country to see a sales decline was the West, where sales dropped by 1.1 %.
The inventory of unsold homes dropped to 4.03 million units in February meaning it would take 9.6 months to exhaust the supply of homes for sale at the February sales pace. That was down from January's level of 10.2 months but still about double what the months' supply had been during the peak of the housing boom.
Existing home sales fell by 12.8 % in 2007, the biggest decline in 25 years, following an 8.5 % drop in 2006. The steep downturn in housing over the past two years has been made worse by a severe credit crunch as financial institutions tightened their lending standards in reaction to multibillion-dollar losses on mortgages that have gone into default, following a five-year boom.
This steep housing slump has raised concerns about a possible recession. Democrats are pushing for greater efforts to stem a tidal wave of mortgage foreclosures to keep more unsold homes from being dumped on an already glutted market.
On Monday, Senator Hillary Clinton campaigned for the Democratic presidential nomination in Pennsylvania called on President Bush to appoint an emergency working group on foreclosures to recommend new ways to confront the housing crisis.
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