Housing markets cool this winter, except for condos

Single-family home sales declined 1.35% in February, but total sales declined a more modest 0.6% as condos and other multifamily unit sales rose 4.8%. Improvements in condo sales may reflect the beginning of a new trend, as many baby-boomers may be beginning to downsize.

The first time homebuyer tax credit was enormously successful in 2009, and probably enticed many potential homebuyers to jump off the fence before the tax credit expired the first time, advancing potential future sales forward into 2009. In addition, an unusually severe winter in many parts of the country probably impacted general housing activity and sale closures in February. Temporary reinstatement of tax credits, expected improvements in labor markets and the return of spring should provide a solid boost to sales in the second quarter. Softness will likely return in the second half of 2010, especially since mortgage rates are expected to rise modestly. However, improved affordability and the likelihood of greater job growth are expected to keep in place the cyclical bottom in housing achieved during late 2008 and early 2009.

Note: New home sales were also stagnant in February, but the new home sales data series are considered lower in overall quality and accuracy than the other housing series.

Existing Total Home Sales Millions of Units at Seasonally Adjusted Annual Rate

Existing Single-Family Home Sales Millions of Units at Seasonally Adjusted Annual Rate