Housing Data Highlight Fragility By Jeff Bater and Conor Dougherty Wall Street Journal 03-23-2010

Housing Data Highlight Fragility
By Jeff Bater and Conor Dougherty
The Wall Street Journal
March 23, 2010

The latest data on the housing market underscored its fragility as the overall economy recovers and showed that a glut of homes for sale and a wave of foreclosures and fire sales are holding down housing prices.

Sales of existing homes fell 0.6% in February from a month earlier to a seasonally adjusted annual rate of 5.02 million, the National Association of Realtors said. Severe winter weather hurt sales in February. In December and January, sales suffered from a surge in sales in the autumn as buyers moved to take advantage of an expiring tax credit, that since has been extended.

"The expiration of that tax credit [and severe winter weather] has caused home sales to crash," Insight Economics' Steven Wood wrote in a research note. "Because the tax credit has been extended and expanded, there should be a recovery in sales over the next two months." The new tax break covers sales through April 30 that close before July 1.

The median price for an existing home was $165,100 in February, down 1.8% from February 2009, the Realtors said. Distressed homes, generally sold at discount, accounted for 35% of sales last month.

A separate report Tuesday from Federal Housing Finance Agency showed that house prices fell 0.6% in January and December's numbers were softer than previously reported. The FHFA index -- which tracks the prices of the same houses over time, but only those sold to or guaranteed by Fannie Mae, Freddie Mac or the Federal Home Loan Banks -- is 13.2% below its April 2007 peak.

Inventories of existing homes increased 9.5% at the end of the month to 3.59 million available for sale, the Realtors said. That represented a 8.6-month supply at the current sales pace, compared with a 7.8-month supply in January.