Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.
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Home sales have been falling since 2005 and prices peaked in 2006. The S&P/Case-Shiller home-price index of 20 metropolitan cities was down 18.5 percent in December from a year earlier, a record decline, the group said last month.
Frankly, the only statistic I need to see right now is the year over year price number. So long as we're seeing double digit declines we're nowhere near a bottom in housing. When we start to see YOY price declines slow to 5% or so, then we'll be able to start talking about a bottom -- but not until then.
However, there are technically some signs that a bottom could occur:
The realtor group’s affordability index reached a record high in January.
That tells us that home buying is far more feasible right now. In addition, we can expect mortgage rates to remain low for sometime:
Fed policy makers last week announced the central bank will buy as much as $300 billion in long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion. The central bank had already committed to buying $600 billion of mortgage-backed securities and bonds sold by government- sponsored housing agencies.
Regarding the "first time home buyer tax credit is spurring demand" argument, the tax credit itself is really an interest free loan from the government rather than a real tax credit.
