WASHINGTON – U.S. home prices rose in February from a year earlier at a solid pace, suggesting that a tight supply of available homes is boosting prices despite slowing sales.
Real estate data provider CoreLogic said Tuesday that prices for existing homes rose 12.2 per cent in February from a year ago. That was up slightly from January’s year-over-year pace of 12 per cent.
On a month-to-month basis, prices in February rose 0.8 per cent from January. But CoreLogic’s month-to-month prices aren’t adjusted for seasonal patterns, such as winter weather, which can depress sales.
Snowstorms, rising prices and higher mortgage rates combined to reduce home sales in February to their lowest level in 19 months.
A tight supply is helping boost prices even as sales slow. Sales fell 0.4 per cent to a seasonally adjusted annual rate of 4.6 million in February from January, the National Association of Realtors said earlier this month. That sales pace would exhaust the number of available homes in 5.2 months, the Realtors’ said — below the six-month supply typically available in healthy markets.
The states with the biggest price gains in the past year were: California, where prices rose 19.8 per cent, followed by Nevada, 18.5 per cent, and Georgia, 14.2 per cent. No states posted a drop in home prices.
Prices in four states reached a record high in February: Colorado, Nebraska, North Dakota and Texas. An additional 22 states are within 10 per cent of their previous peaks, CoreLogic says.
Nationwide, average home prices remain 16.9 per cent below the peak reached in April 2006, at the height of the housing bubble.
Home sales and construction faltered over the winter, partly because harsh weather discouraged some Americans from venturing out to house-hunt. In addition, the average rate on a 30-year mortgage is about a percentage point more than it was last spring. That means buying costs are up.
Most economists think the housing recovery could pick up once the spring buying season begins, though likely at a slower pace than last year.
But some recent reports haven’t been encouraging. A measure of signed contracts fell for the eighth straight month in February. That suggests sales will remain slow in coming months. Signed contracts usually lead to a finished sale in one to two months.
And home construction fell for a third straight month in February. But there was one hopeful sign: Developers applied for the most building permits in four months.