Condo, Co-Op Sales Increase in February, Recovery Expected by 3Q, Says NAR

By Anuradha Kher, Online News EditorWashington, D.C.–Despite an increase in existing-home sales in February, sales activity remains relatively soft, a consequence of additional layoffs and buyers waiting for housing provisions in the economic stimulus package to take effect, according to the National Association of Realtors (NAR). Existing-home sales—including single-family, townhomes, condominiums and co-ops – rose 5.1 percent to a seasonally adjusted annual rate of 4.72 million units in February from a pace of 4.49 million units in January with a year-over-year decrease of 4.6 percent Sales of condominium and co-op increased as well, to a seasonally adjusted annual rate of 490,000 units in February from 440,000 units in January, which is still 13.1 percent lower than the 564,000-unit pace a year ago. The median existing condo price was $172,200 in February, which is 18.7 percent lower than February last year.“Prices stabilized and there was a modest recovery of volume,” Jed Smith, managing director of quantitative research, tells MHN. “But we haven’t had a chance to see the effects of the administration’s new programs, and this will take about five to six months. At that point, we forecast, the bottom will be reached. Condos and co-ops tend to lag behind the single-family market, and seem to be hit harder so their recovery might take a little longer.”According to Smith, the single-family housing market will begin its recovery by the third quarter of 2009 and condos and co-ops will follow shortly after. He says the tax credit and other stimulus measures will contribute a great deal towards the recovery.Lawrence Yun, NAR chief economist, said first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges. “Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he says. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.” NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said home shopping activity has picked up with housing affordability at a record high. “The number of buyers looking for homes rose 5 percent in February, and also was 5 percent above a year ago,” he said. “It appears most of the increase in buyer traffic occurred in the latter part of the month after the $8,000 first-time buyer tax credit was put in place. At the same time, mortgage purchase applications have risen, so we expect to see sales picking up around late spring.” Smith adds, “Based on our models, we forecasted at least a million units year will be sold due to the various measures. But consumer confidence is down and unemployment is high, both of which will have a negative impact on the market, making it a moderate recovery in the coming months.”