Sales of previously occupied homes rose in February to the highest level in over three years and the number of homes for sale increased for the first time in eight months.
Americans increased their purchases of existing homes 0.8% last month to an annualized rate of 4.98 million, the highest since November 2009. The number of homes on the market climbed to 1.94 million from 1.770 million in January as rising prices prompted more sellers to offer their properties.
At February's selling rate it would take 4.7 months to clear the inventory, up from 4.3 months in January. The supply of homes for sale has been falling steadily since it reached 11.9 months in July 2010.
Historically American builders have averaged 1.4 million units of new home construction a year over the past 30 years. In the past five years that rate has fallen to just 681,000 new homes per year as the vast supply of homes built during the housing bubble was slowly absorbed by speculators and homeowners. This lack of construction combined with home owners who suffered large declines in the value of their homes in the collapse of the housing bubble after 2006 and kept their homes off the marketed waiting for prices to return have contributed to the current shortage of homes for sale.
The median price of a home jumped to $173,600 in February, 11.6% higher on the year, the largest 12-month gain since November 2005.
Chief Market Strategist