Existing-home sales fall locally, nationally

Sales of previously owned homes declined both nationally and locally in February, as an expected boost from the federal tax credit again failed to materialize and record snowfall in the Philadelphia area canceled or postponed closings.

The National Association of Realtors said today that sales last month were 0.6 percent lower than in February 2009. For this region, Prudential Fox & Roach's HomExpert Market Report showed a 4.5 percent year-over-year drop.

Nationwide, prices declined 1.8 percent, the Realtors group said, but they rose 1.2 percent in the eight-county Philadelphia region, according to HomExpert.

Lawrence Yun, chief economist for the Realtors association, said winter storms in February might have masked underlying demand.

"Some closings were simply postponed by winter storms, but buyers couldn't get out to look at homes in some areas, and that should negatively impact near-term contract activity," he said.

Noted Prudential Fox & Roach agent Mike McCann, who sells in Center City and adjacent neighborhoods: "It got real crazy, especially with people canceling even before the first snowflake. I was even willing to pick people up and bring them to settlement, but all the title and mortgage companies were closing."

Still, Yun emphasized that "the housing recovery is fragile at the moment," adding that "the key test for a durable recovery comes in the next few months, as the tax-credit deadline approaches."

IHS Global Insight economist Patrick Newport called February's drop "further payback" for the first-time homebuyers' tax credit that expired Nov. 30.

"This is the third consecutive month of decrease, as sales are currently down 23 percent from their November peak," said Newport, based in Lexington, Mass.

Economist Joel L. Naroff, in Holland, Bucks County, said, "We all knew that we would pay dearly for the surge in sales in the fall that resulted from the fears of the first-time buyer incentive disappearing. The assumption was that December through February would be disappointing. It was."

The current tax credit applies to houses purchased between Dec. 1 and April 30; the deadline for closings is June 30. Qualified first-time buyers can get up to $8,000; those who have not bought a house in five years can get up to $6,500 if they settle on a new one before the deadline.

Most experts believe the tax credit won't be renewed and look to its end for a test of market stability. If anything, measurements of the market are inconsistent.

KB Homes, which builds in 10 states, today reported a smaller loss in its fiscal first quarter, yet company CEO Jeffrey Mezger said he did not see a "sustained nationwide recovery."

The Federal Housing Finance Agency reported a 0.6 percent drop in prices of all homes in January from December, and 3.3 percent year-over year decline. Prices have fallen 13.2 percent from their April 2007 peak, the agency said today.