The pace of home sales dipped a bit last month but the housing market is heading into spring in better shape that it was last year.
Sales of existing-home sales slipped 0.9 percent in February to a seasonally adjusted annual rate of 4.6 million, according to the National Association of Realtors. That pace is 8.8 percent higher than a year ago.
Home prices held steady, according to the NAR data. The median price of all housing types – including single-family homes, townhomes, condominiums and co-ops - was $156,600 in February, up 0.3 percent from a year ago. But prices have fallen roughly 10 percent since last June.
Sales last month were mixed, declining sharply in the Northeast and West. Sales were up in the Midwest and South.
Though the housing market is heading into the spring selling season somewhat stronger than last year, some economists caution that the damage from the housing bust is deep and the industry is years away from fully recovering. The February sales figures from the real estate trade group fell short of expectations for economists, who were looking for sales to rise to a 4.62 million-unit annual rate, according to Reuters.
"It may modestly dent the narrative we've been seeing over the past couple of weeks of bettering U.S. economic data," said John Doyle, currency strategist at Tempus Consulting in Washington.
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 percent.
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.
"We're not seeing any pricing power, which suggests it's still a weak market," said Gary Thayer, chief macro strategist at Wells Fargo Advisers in St. Louis. "But prices are not dropping as sharply as they were several years ago. We are seeing some signs of stability in pricing."
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. (Sales are recorded when buyers close on homes.)
Though sales are stronger than a year ago, Even after the gains, the pace is far below the 6 million that economists equate with healthy markets. And the makeup of those sales still signals a troubled market.
Homes at risk of foreclosure made up 34 percent of sales, down only slightly from 35 percent in January. In more stable markets, foreclosures make up less than 10 percent of sales. The high foreclosures rate has pushed the price of an existing home lower than a new one, which now sells for about 30 percent more that one that's been occupied before. That's twice the normal markup.
About 33 percent of pending contracts to buy a house were canceled, the NAR said. Investors bought 23 percent of homes last month, with first-time buyers accounting for about third of the transactions.
Data on Tuesday showed permits to build homes rose to a near 3-1/2 year high in February. However, the housing market continues to be choked by a glut of unsold properties, which are weighing down prices.
The inventory of unsold homes on the market increased 4.3 percent to 2.43 million units last month. At February's sales pace, that represented 6.4 months' supply, up from 6.0 months in January. A supply of six months generally is considered ideal.
Distressed properties, foreclosures and short sales, which typically occur at deep discounts, made up a third of overall sales last month.