Existing home sales drop after three months of gains

While houses are affordable and mortgage rates low, the difficulty in obtaining a mortgage will likely mean the housing market will recover in fits and starts, according to NAR Chief Economist Lawrence Yun.

“Housing affordability conditions have been at record levels and the economy has been improving, but home sales are being constrained by the twin problems of unnecessarily tight credit and a measurable level of contract cancellations from some appraisals not supporting prices negotiated between buyers and sellers,” he said. “This tug and pull is causing a gradual but uneven recovery.”

First-time homebuyers made up 34 percent of home purchases in February, up from 29 percent in January but down from 42 percent a year ago.

In addition, all-cash sales stood at a record 33 percent in February, an indication that investors are buying up homes as their prices fall, Yun said.

The national median existing-home price was $156,100 in February, 5.2 percent less than at the same time one year ago.

“The decline in price corresponds to the record level of all-cash purchases where buyers — largely investors — are snapping up homes at bargain prices,” Yun said. “We’d be seeing greater numbers of traditional homebuyers if mortgage credit conditions return to normal.”