WASHINGTON — Sales of existing homes fell for a third straight month in February, pushing sales down to the lowest level since last July. There is concern the fragile housing rebound is faltering, making it harder for the overall economy to recover.
The National Association of Realtors said Tuesday that sales of previously occupied homes dropped 0.6 percent in February to a seasonally adjusted annual rate of 5.02 million.
The weakness in sales depressed prices with the median home price dropping almost 2 percent from a year ago to $165,100.
But sales activity varied across the country. In the Midwest, sales jumped almost 9 percent, and were up more than 2 percent in the Northeast. In the South, sales fell about 1 percent, and were down almost 5 percent in the West.
“A number of housing markets may be stabilizing or starting to rebound, though we do not yet see, in many respects, a sustained nationwide recovery,” said Jeffrey Mezger, president and chief executive officer, of KB Home, which builds homes in 10 states.
In fact, sales nationally have been declining since November, eroding gains made over the summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector.
To keep mortgage rates low, the Federal Reserve has spent almost $1.25 trillion. In addition, Congress extended a deadline for homebuyers to qualify for tax credits. Both programs are set to end soon.
High unemployment and tough lending standards appear to be holding buyers back. That could derail housing as it tries to emerge from the worst downturn in decades and harm the overall economy.
“Without a firm foundation in housing, the economy will struggle to return to normal,” said Lawrence Yun, chief economist for the Realtors.
He said it will be critical to see a rebound in sales in coming months to keep inventories from surging. For February, the inventory of unsold homes jumped by 312,000 to 3.59 million, an unusually large increase that pushed the supply of unsold homes to 8.6 months.
Yun called that increase “discomforting” and said if it climbs above 10 months supply it could put significant downward pressure on prices.
There is a $8,000 credit for first-time buyers and a $6,500 credit for current homeowners who have lived in their property for the past five years.
Buyers must sign sales contracts by the end of April and complete their purchases by the end of June to qualify for the tax credits. So far, however, there has been little indication that the tax credit extension is generating much activity.