WASHINGTON — While the National Association of Realtors reported the largest monthly rise in home sales in three years during the month of February that gain was prior to concerns over the subprime market struck.
Additionally, that rate was only achieved after the median home price fell 1.3% from the previous year, according to NAR.
"The housing sales data we got today is history," CUNA Chief Economist Bill Hampel told CNN Money. "The news on the subprime has all come since these contracts were signed." Now, the market and regulatory response to subprime mortgage issues means fewer people will not be able to qualify for the same mortgage amounts as they previously might have. This will mean extra homes on the market providing further downward pressures, he added. "All of this points to a softer housing market than we otherwise would have expected," Hampel told CNN Money.
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In NAFCU Macro Data Flash, Chief Economist Tun Wai stated, "The brisk pace of existing home sales in February is encouraging, however, the decline in the median home prices and the increase in inventory levels still show a softness in the housing market." Existing homes inventory rose from 6.7 months of supply, up from 6.6 months in December and January. The bulk of the increase in home sales occurred in the Northeast with 14.2% growth.
"NAFCU expects median home prices to continue to drop this spring and then gradually rise by year-end. The value of homes has been adjusting to the excess inventory and borrowers currently face relatively low long-term interest rates," Wai said.
Existing home sales this year are forecast to be 5.95 million units, according to the Macro Data Flash, down from 6.48 million units in 2006.
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