Existing-home sales take surprising jump

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Author: Noelle Knox

Section: Money, Pg. 01b

Sales of existing homes rose an unexpected 5.2% last month, ending a five-month losing streak, as buyers took advantage of warm weather and kicked off the spring home-shopping season early, the National Association of Realtors said Thursday.

March, typically a strong month, is also looking good in many regions, boosting the case for a soft landing rather than a sudden plunge, in the hottest real estate markets. Early tallies from a dozen major cities across the country signal a buoyant March, though still below the levels of a year ago.

"There may be more demand out there than people who crunched the numbers had expected," said John Karevoll of DataQuick, who analyzed the sales reported so far this month for USA TODAY.

Even in Southern California, where doomsayers have predicted the market will tank, home sales remain healthy.

"What I'm seeing from the trenches is March is looking normal: Inventory has leveled off, and sales are steady," says Phil Romero, CEO of Century 21 Award-Superstars, which has offices in that region. "There are real negotiations on both sides, concessions by both parties."

Nevertheless, economists expect home sales to fall for the year overall, ending a five-year feeding frenzy for housing.

"It's a nice rebound, but we have to discount some of this because of the warm weather, particularly in the Northeast," said David Lereah, the NAR's chief economist. "We may give a little of this back in the next month or two."

Lereah has lowered his sales forecast for the year to a 5.7% drop because mortgage rates are rising faster than expected.

In February, buyers had to pay an average of 6.25% on a conventional 30-year, fixed-rate mortgage, up from 6.15% in January, according to Freddie Mac.

Home sales last month hit a seasonally adjusted annual pace of 6.91 million, down from January's upwardly revised rate of 6.57 million. The sales were red-hot in the Northeast, rising about 19%. In the Midwest, sales jumped 11%, followed by the West with a 5% increase. Only the South saw sales decline, falling nearly 3%.

"It was a little stronger than expected," said Nick Buss of PNC Bank.

The Commerce Department will release February's new-home sales today, and Buss said, "Given what we just saw out of existing-home sales, I wouldn't be surprised to see new-home sales slightly higher than January."

Nationwide, the median home price -- half cost more, half less -- was $209,000, up nearly 11% from February 2005. The condo market recovered from a dismal January, up about 9%. The median price: $214,300, up nearly 4% from last year.

(c) USA TODAY, 2006