Analyzes Major Finding in the February Existing Home Sales Reports

Share Article provides analysis on the state of the real estate market in the U.S. and forecasts what the market is likely to do in the coming months. Analysis includes the type of buyers who are closing on homes, factors that are affecting home sales and how the different regions of the country compare to one another.

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Many buyers are staying in the market after experiencing a contract failure and making an offer on another property, showing their determination to take advantage of the favorable conditions

The latest real estate health report analyzes data found in the NAR February Existing-Home Sales report. The report highlights the key findings and examines what buyers and sellers are most likely to experience in the months to come based on the market performance in February.

The February Existing Home Sales Report, like other recent reports, show 2012 is continuing the progress seen at the end of last year. Although things appear to be stabilizing there are still factors that are holding real estate markets back from fully recovering.

Key Findings in the February 2012 Existing Home Sales Report Include:

  •     4.59 million existing home sales in February
  •     0.9% decrease in home sales compared to last month after totals were revised upward
  •     8.8% higher than total home sales in February 2011
  •     Unsold inventory was up 4.3% from January, but 19.3% lower than a year ago
  •     Median existing home price rose 0.3% to $156,600 for all types of homes
  •     Foreclosures and short sales accounted for 34% of the sales, down from 39% in February 2011
  •     32% of home buyers were first-time buyers
  •     23% of home buyers were investors
  •     33% were all cash sales

In February there were mixed results in the four regions across the U.S., with the South and Midwest seeing increases and the West and Northeast seeing declines compared to last month. The Midwest experienced the largest increase in sales at 1%, followed by the South at 0.6%. Home sales in the East fell 3.3% and the West dropped 3.2%.

Top Factors for the Improvement in Home Sales

  •     More balanced supply and demand
  •     Home prices stabilizing
  •     Sustained job growth
  •     Rise in rental prices
  •     Record low mortgage interest rates

Conditions That Are Holding the Market Back

While the overall market is experiencing important improvements in median price and inventory levels, there are still a few things that are suppressing the real estate industry from making a more robust recovery. These two factors are canceled contracts and foreclosures and short sales that depreciate prices.

Cancelled contracts, due largely to appraisal failures and declined mortgage applications, have been an ongoing problem since mortgage lending was overhauled. However, at 31% cancelled contracts are way up from a year ago when they were just 9%.

NAR Chief Economist explains that while it's not ideal, this isn't all bad news. "Many buyers are staying in the market after experiencing a contract failure and making an offer on another property, showing their determination to take advantage of the favorable conditions, but the cancellations are contributing to an uneven sales pattern."

Though there has been a drop in the number of foreclosures and short sales, they are still suppressing home prices. While this may seem like a good thing to buyers, it isn't for the overall market. Real estate agents and experts do suggest that there was over correction in home pricing and things are beginning to stabilize which means that prices are likely to keep inching upward.

To learn more about what can cause a real estate contract to fall through or to search for homes for sale in your area, please visit:

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