HOLLYWOOD, FL - NOVEMBER 28: A 'For Sale' sign is posted in front of a house on November 28, 2012 in Hollywood, Florida. According to S&P Index reports, for the month of September home prices in major U.S. cities have risen as much as 3 percent as compared with the same month last year. (Photo by Joe Raedle/Getty Images)2012 Getty Images
Things seemed to be picking up for the housing market after the subprime mortgage crisis sent home values plummeting.
Sales of new homes in January were the highest they'd been in four years, the strongest pace since September 2008.
But the apparent rebound was short-lived.
New home sales fell in February, dropping to a seasonally adjusted annual rate of 411,000, the Commerce Department reported Tuesday. That is a decline of 4.6 percent from January, when the rate ticked up to 431,000.
The decline in February still left sales 12.3 percent higher than a year ago. While sales remain below the 700,000 level considered healthy, the housing recovery is gaining strength and is starting to look sustainable. Steady job creation and near record-low mortgage rates are spurring sales.
The median price of a new home sold in February was $246,800, up 2.9 percent from a year ago.
By region of the country, sales were up only in the Midwest, which saw a 13.7 percent increase. Sales fell in every other region, led by a 13.3 percent drop in the Northeast, where severe winter weather likely dampened activity. Sales were down 9.7 percent in the South and fell 2.1 percent in the West.
Last week, the National Association of Realtors reported that sales of previously owned homes rose 0.8 percent in February to a seasonally adjusted annual rate of 4.98 million units. That was the fastest sales pace since November 2009 when a temporary home buyer tax credit had boosted sales.
The rise in demand is helping to boost sales and prices in most markets. Low inventories have been a problem but the Realtors reported a gain in the number of homes on the market at the end of February compared to January. It was the first monthly rise in inventories of previously owned homes since April although the increase still left the total 19 percent below a year ago.
But analysts saw the increase as a hopeful sign that more homeowners are gaining confidence in the housing recovery and becoming willing to put their homes up for sale, helping to alleviate an inventory squeeze which had held back sales in many markets.
Low inventories are just one of several constraints. First-time home buyers are viewed as critical to any sustainable housing recovery, but their numbers are still below healthy levels. They made up 30 percent of existing home sales in February, still well below the 40 percent that is typical in a healthy market.
Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would-be buyers unable to qualify for the super-low mortgage rates which have been spurred by the Federal Reserve's efforts to ease credit as a way to give the economy a boost.
Rising demand for homes has encouraged builders to boost construction. Builders started work at a seasonally adjusted annual rate of 910,000 in February, the second fastest pace since June 2008. Applications for building permits rose to 946,000, the highest level since June 2008.
Based on reporting by The Associated Press.