US Existing Home Sales rose in February to 4.72 million from 4.49M in the prior month, consistent with last week’s release of a rise in Housing Starts. Sales on a month-over-month basis rose 5.1% following an equally large decline of 5.3% in January. The move came as a surprise as economists surveyed by Bloomberg had expected the measure to fall to 4.45M and for a monthly decline of 0.9%. Also of note is an 11.4% rise in the sale of Condos/Co-ops, a sharp contrast to the 10.2 percent decline the group suffered in the previous month. Adding further optimism is a small rise in the average price of a sold home, which rose from $206,700 in January to $209,600 for February.
Stability in the housing market is seen by experts as a crucial step towards economic recovery. Rising sales and prices are expected to cause renewed lending and decreases in writedowns for financial institutions. Recovery in the sector may also have a positive effect on consumer spending and confidence as well as increasing industrial activity in construction and basic materials. Despite the upside, caution remains high as the average price decline remains steep at over thirteen percent on an annual basis and the excess inventory of homes remains at a hefty 9.7 months of supply.