March 23rd, 2011 8:24 AM by Lehel S.
Sales of previously owned homes dropped 9.6% in February and prices fell to their lowest level since 2002, reflecting a continued slump in the U.S. real estate market.The National Assn. of Realtors on Monday said home resales dropped to an annual rate of 4.88 million from an upwardly revised 5.4 million in January. The data is seasonally adjusted.Economists surveyed by MarketWatch expected sales to drop to a rate of 5.1 million.Sales of new and used homes have been down in the dumps since a housing market bubble burst during the recession. High unemployment, combined with stricter lending standards, have made it harder for Americans to buy homes despite low interest rates."The housing market is still very depressed and a major drag on the economy, especially household net worth," said senior economist Chris Christopher of IHS Global Insight.Many families have also lost their homes because they couldn't keep up with mortgage payments, putting more properties onto the market. The raft of foreclosures has helped to drive down prices, and some buyers appear to be holding out for even better deals.Home resales, for instance, were 2.8% lower in February than they were a year earlier.The distressed state of the market has also drawn heavy interest from investors. Many have plunked down all cash to buy homes in anticipation of selling them at higher prices as the economy improves.Investors accounted for a still-high 19% of all home resales in February, down from 23% in January. Distressed sales jumped to 39% from 37% in January, the highest level in two years.All-cash sales, meanwhile, edged up to a record 33% of total purchases. That's more than three times the average in a healthy economy.Some good news: the percentage of first-time buyers purchasing previously owned homes rose to 34% from 29% in January. In normal times, first-time buyers account for about 40% of all home resales.First-time buyers appeared to have been lured by falling prices. The median price of homes sold fell 5.2% from last year to $156,100, the lowest at least since April 2002.Sales fell in all four regions, with the Midwest experiencing the biggest decline, 12.2%.Inventories of previously owned U.S. homes for sale rose 3.5% to 3.49 million, representing 8.6 months' supply. That was up from 7.5 months in January.