Posted by Marcelo Perez

Well it looks like the housing market is recovering very nicely, even without the long-awaited government’s bad-asset purchase plan in place. Resales of homes and condos in the US spiked higher in February, following a pullback in sales in January. Sales rose 5.1% for the month, from a seasonally-adjusted annualized rate of 4.49 million in January to 4.72 million. The number was above expectations, as economists estimated sales at a rate of 4.50 million.

The US housing market as a whole has improved significantly in the last few months, as inventories, mortgage rates, and prices have all fallen to a point where demand is once again created. Resales of US homes have fallen 4.6% in the past year.

Despite the jump in sales, inventories of unsold homes rose for the month, most likely because banks are releasing more foreclosed properties into the market as conditions improve. Inventories in February are up 5.2% to 3.80 million units for sale. That represents a 9.7-month supply, still well below the 11.2-month supply in November.

Market and government forces are creating the incentives necessary for increased demand. On top of the sharp declines in mortgage rates that has occurred in the past few months, first-time home buyers are eligible for sizeable tax credits from the government if they end up buying a property. And that, according to Lawrence Yun, the NAR chief economist, had to do with much of the gain in February, as first-time buyers accounted for half of all home sales last month, with activity concentrated in lower price ranges.

NAR estimates the impact of the stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package. Inventory is expected to fall below an 8-month supply by the year end, which would be consistent with home price stabilization.

Falling prices are definitely spurring demand as well, as the median sales price of a house fell to $165,400 in February, down 15.5% compared with a year earlier. Although falling prices might not be a positive in the short-term, it has to occur for a market recovery to continue. The faster prices fall, the faster inventories are cleared out and the quicker prices would stabilize.

Via NAR:

Regionally, existing-home sales in the Northeast jumped 15.6 percent to an annual pace of 740,000 in February, but are 14.9 percent below February 2008. The median price in the Northeast was $251,200, down 4.8 percent from a year ago.

Existing-home sales in the Midwest increased 1.0 percent in February to a pace of 1.04 million but are 14.0 percent lower than a year ago. The median price in the Midwest was $131,000, which is 7.8 percent below February 2008.

In the South, existing-home sales rose 6.1 percent to an annual pace of 1.74 million in February but are 11.2 percent below February 2008. The median price in the South was $146,700, down 10.0 percent from a year ago.

Existing-home sales in the West increased 2.6 percent to an annual rate of 1.20 million in February and remain 30.4 percent higher than a year ago. The median price in the West was $204,600, which is 30.3 percent below February 2008.

Read the Full Report.