(Bloomberg News) A gain in sales of U.S. previously owned homes in March failed to make up for the ground lost the prior month, a sign that the housing market is taking time to recover.
Purchases increased 3.7% to a 5.1 million annual rate, exceeding the 5 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined from a year earlier, and 40% of the sales were distressed properties.
Even with last month's gains, housing may remain a weak component in the economic recovery that began in June 2009 as unemployment, falling property values and stricter loan rules push foreclosure filings to a record level. At the same time, a drop in prices has made houses more affordable, suggesting demand may not fall much more.
"We continue to just tread water along the bottom," said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. "The housing market is fairly depressed. We think home prices will fall further."
Stocks held earlier gains after the report as sales at companies from Intel Corp. to Yahoo! Inc. exceeded estimates and commodity producers gained. The Standard & Poor's 500 Index rose 1.4% to 1,330.99 at 10:12 a.m. in New York.
Exceeds Median
Estimates for March existing home sales ranged from 4.59 million to 5.4 million, according to the median of 74 forecasts in the Bloomberg survey.
"Home sales are strongest in the very-low price range" of less than $100,000 Lawrence Yun, chief economist at the Realtors' association, said at a news conference today in Washington.
Of all purchases, cash transactions accounted for 35%, which is probably the highest share on record, Yun said. The realtors group began tracking the monthly figure in August 2008, and the share on a yearly basis before that was around 10%, Yun said.
Sales rose in three of four regions in March, led by an 8.2% gain in the South. The West fell 0.8%.