Total sales of existing homes in February dropped, according to the National Association of Realtors, so let’s look at other real estate figures that are more encouraging:
1. More cash sales
Cash sales accounted for 33 percent of total home sales in February, a new record percentage and an increase from 32 percent in the previous month and from 27 percent in February last year.
2. First time homebuyers are considering buying a home even without tax incentives.
The percentage of homes sold to first-time homebuyers increased in February to 34 percent from 29 percent in the previous month. The percentage in February last year was high at 42 percent largely because of the tax incentives offered by the government. After the expiration of the tax incentive last year, sales to first-time homebuyers slowed. But the February data showed that this group is coming back despite the lack of tax incentives.
3. Low mortgage rates are still relatively low.
Freddie Mac was still giving mortgage rates below 5 percent for fixed-rate 30-year loans. The mortgage rate in February was 4.95 percent, higher than the January rate of 4.76 percent, but lower than the February 2010 rate of 4.99 percent.
The sales of existing homes, which include single-family units, condos, townhomes and co-ops, slowed down in February by 9.6 percent to an adjusted annual rate of 4.88 million units from the adjusted annual rate of 5.4 million units in January. The February rate was also lower by 2.8 percent than the 5.02 million rate in February 2010.
The drop in home prices has different effects on different parties. Home sellers naturally don’t like any price decrease but buyers like it and are always looking for great deals.
Although sharp price drops damage the housing market as a whole, it’s the substantial price decreases over the past two years that have boosted home affordability. The median price for existing homes in February was $156,100, a drop of 5.2 percent from the median in February last year.
Distressed homes, meanwhile, again took a huge portion of the market in February, with 39 percent of total sales involving sales of foreclosure or short sales. This percentage was even higher than that of the January share which was 37 percent and the February 2010 share which was 35 percent.
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