Homes sold at an annual rate of 5.02 million units last month, down from 5.05… (Joshua Lott / Bloomberg )
The housing market stumbled anew in February as sales of previously owned homes fell for the third consecutive month and the number of dwellings available for buyers climbed.
Though sales declined 0.6% from the previous month, as reported Tuesday by the National Assn. of Realtors, the drop wasn't as bad as economists had expected.
Still, analysts said the sales results showed that the nation's housing recovery -- fueled by tax subsidies, low interest rates and cheap foreclosure properties -- is struggling to sustain its momentum. Progress will come fitfully this year, and housing is unlikely to give a major boost to the broader economy, they said.
"The housing market has usually helped to pull the country out of recession," said Celia Chen, a housing economist for Moody's Economy.com. "This time around, the expansion of the housing market is going to be very weak."
Underscoring housing's travails, Los Angeles builder KB Home reported that its fiscal first-quarter loss narrowed to $54.7 million, or 71 cents a share, from $58.1 million, or 75 cents, in the year-earlier quarter, and predicted it would return to profitability this year. But the results for the period that ended Feb. 28 were weaker than Wall Street had anticipated, sending the company's stock to $17.15 a share, down 29 cents.
February's decline in sales of previously owned homes, which make up the bulk of the nation's buying activity, was smaller than January's 7.2% decrease and December's 16.7% plunge but gave little cheer to analysts.
"There is always next month, right?" said Cameron Findlay, chief economist for LendingTree.com.
The data are estimates based on activity on the Realtors group's proprietary multiple listing service and are reported by giving an annual sales pace adjusted each month to take into account seasonal variations.
Last month, homes sold at an annual rate of 5.02 million units, down from the 5.05-million-unit pace reported in January.
That was still 7% above the rate of 4.69 million units in February 2009, when the country was gripped by the financial crisis.
The available stock of homes for sales rose 9.5% to 3.59 million in February, an 8.6-month supply at the current pace.
"The disappointing part of the equation is the supply," Findlay said. "That is not going to bode well for prices."
The national median -- the price at which half the sale prices are higher and half lower -- was $165,100 in February, with distressed homes accounting for more than 1 in 3 sales. That was a 1.8% drop in price from February 2009.
"The key question remains whether the second home-buyers' tax credit will boost sales," Gregory Daco, U.S. economist for IHS Global Insight, wrote in a note to clients. "So far, the housing recovery is very slow, and the second tax credit appears to be having a minimal effect."
Buyers flooded the market leading up to the initial Nov. 30 expiration of an $8,000 federal tax credit for first-time purchases.
Congress extended the credit, giving buyers until April 30 to sign sales contracts, and expanded the tax break to include as much as $6,500 for current homeowners. Some analysts expect another boost in sales around the tax credit's current deadline and further recovery this year if job growth occurs.
But these experts also fear a new wave of foreclosures despite the Obama administration's $75-billion program to help struggling homeowners. That program has been criticized for failing to make reduced mortgage payments permanent for thousands.
"The large number of distressed homes that are in the pipeline will cause prices to fall further," Chen of Moody's Economy.com said.
And though the financial crisis has subsided, the market for new homes is still uncertain. Sales of new homes plunged 11.2% in January to their lowest pace since 1963. The Commerce Department will report February sales figures Wednesday.