Lower home prices, an $8,000 federal first-time buyer tax credit and low interest rates are all apparently working together to lure a sizeable number of first-time homebuyers into the market, according to data released by the National Association of Realtors yesterday.
Almost half of all home sales last month were by first-time homebuyers, the trade group said, with sales of distressed homes -- which sell for about 20 percent less than normal market price -- making up 40 percent to 45 percent of all home sales in February, the group adds.
But, the housing market has a long ways to go to recovery. While existing home sales were up 5.1 percent in February from January, they were still down 4.6 percent from February 2008, NAR said. Thanks to the number of distressed home sales, the median price for existing homes (including all home types) fell 15.5 percent from a year ago to $165,400, NAR said.
Also working in homebuyers' favor is a high inventory of homes for sale -- total housing inventory climbed 5.2 percent in February, representing a 9.7-month supply at the current sales pace, NAR said.
Which doesn't spell good news for home sellers. "An overhang of inventory will continue to plague the market, putting downward pressure on prices and construction activity for some time to come," said Adam York, an economist at Wachovia in Charlotte, N.C., in a Reuters news story. The site also include a handy graphic of several month-to-month percent changes in U.S. home sales.—Lauren Baier Kim