U.S. sales of previously occupied home dipped last month but the sales pace for the winter was the best in five years.
The National Association of Realtors said Wednesday that home sales fell 0.9 per cent last month to a seasonally adjusted annual rate of 4.59 million. That's down from a revised 4.63 million sold in January — the highest level since May 2010.
The last three months have been the best for winter sales in five years. A mild winter and a stronger job market have helped boost sales ahead of the all-important spring buying season.
Even with the gains, sales remain below the 6 million that economists equate with healthy markets. And the makeup of those sales still signals a troubled market.
Sales among first-time buyers, who are critical to a housing recovery, fell slightly to 32 per cent of all purchases. That's down from 33 per cent in January. In healthy markets, first-time buyers make up at least 40 per cent.
And homes at risk of foreclosure made up 34 per cent of sales, down only slightly from 35 per cent in January. In more stable markets, foreclosures make up less than 10 per cent of sales.
There have been other signs of improvement in the depressed housing market.
Homebuilders have grown more confident in the past six months after seeing more people express interest in buying a home. In February, they requested the most permits to build homes since October 2008.
Mortgage rates are near record lows. And the supply of homes has fallen to its lowest level in seven years.
A lower supply helps push up prices, which lures more sellers onto the market and generally improves the quality of homes for sale. Rising prices also boost sales because buyers want to invest in homes that are appreciating in value.
For the past few years, the market has been saturated for years with foreclosures. That has put downward pressure on prices and driven away buyers.
A key reason for the brighter housing outlook is the job market has strengthened. From December through February, employers added an average of 245,000 jobs a month. The unemployment rate has fallen to 8.3 per cent, the lowest in three years.
Still, economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering.
Fewer first-time buyers, who are critical to a housing recovery, are in the market for a home. They made up roughly one-third of sales last year. In healthy markets, the percentage is at least 40 per cent.
Many can't qualify for loans or meet higher down-payment requirements. Even those with excellent credit and stable jobs are holding off because they fear that home prices will keep falling.
Sales are measured when buyers close on homes. Some deals have been scuttled before the closing after banks declined mortgage applications, home inspectors found problems, appraisals showed a home was worth less than the bid, or a buyer lost a job.
The high rate of foreclosures has made resold homes cheaper than new ones. The median price of a new home is roughly 30 per cent above the price of one that's been occupied before — twice the normal markup. Investors are taking advantage of the discounts.