Fewer Americans bought previously occupied homes in February, and those who did purchased them at steep discounts. The weak sales and rise in foreclosures pushed home prices down to their lowest level in nearly 9 years.
The National Association of Realtors said Monday that sales of previously occupied homes fell last month to a seasonally adjusted annual rate of 4.88 million. That's down 9.6 percent from 5.4 million in January. The pace is far below the 6 million homes a year that economists say represents a healthy market.
Nearly 40 percent of the sales last month were either foreclosures or short sales, when the sellers accept less than they owe on the mortgage.
One-third of all sales were purchased in cash -- twice the rate from a year ago. In troubled housing markets such as Las Vegas and Miami, cash deals represent about half of sales.
The median sales price fell 5.2 percent to $156,100, the lowest level since April 2002.
"This information suggests that value investors are entering the market, possibly a sign that home sales and construction are nearing a bottom," said Joseph A. LaVorgna, chief U.S. economist for Deutsche Bank Securities. "Lower prices are certainly a factor behind the opportunistic buying."
Western New York, however, has generally bucked the national trends in housing. The Buffalo Niagara Association of Realtors will release its February data early next month, but sales in January soared 25 percent, while the median sales price rose 10 percent.
Millions of foreclosures have forced down home prices, and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further. High unemployment is also deterring buyers. Job growth, while expected to pick up this year, will not likely raise home sales to healthier levels.
New home prices are now 45 percent higher than prices for previously occupied homes. A more normal difference is about 15 percent, an indication that old homes on the market are being sold at comparatively cheap, and affordable, levels.
The number of first-time homebuyers rose to 34 percent of the market, partly because of rising rents. A more healthy level of first-time homebuyers is about 40 percent, according to the trade group.
But home prices and sales are uneven across the country. In Miami, where prices have dropped 18.6 percent since last year, sales have skyrocketed 46.4 percent over the same period. In St. Louis, where prices rose 8.2 percent over the past year, sales have fallen 8.6 percent.
For February, sales fell in all four regions of the country, by 12.2 percent in the Midwest, 10.2 percent in the South, 8 percent in the West and 7.2 percent in the Northeast.
Sales of single-family homes fell 9.6 percent to an annual rate of 4.25 million units.
News Business Reporter Jonathan D. Epstein contributed to this report.