Sales soar to a 3-year high

The median price of a home keeps falling, dropping to 212,800 last month.
WASHINGTON (AP) -- Sales of existing homes rose in February by the largest amount in nearly three years, but worsening troubles in subprime mortgages were viewed as a roadblock to a full-fledged rebound.
The National Association of Realtors reported Friday that existing-home sales climbed 3.9 percent last month, pushed higher by a milder-than-normal winter that boosted sales in areas of the country such as the Northeast.
It was the biggest one-month gain since March 2004 and left sales at an annual rate of 6.69 million units, a pace that was still 3.6 percent below a year ago.
Even with the improvement in sales, the median price of a home kept falling, dropping to 212,800 in February, down 1.3 percent from a year earlier. It marked a record seventh straight decline in prices compared with the same month a year earlier.
The price weakness was a far cry from the double-digit price increases that were being recorded during housing's boom years.
After five years in which sales set new records, sales of existing homes dropped by 8.5 percent last year, the biggest annual decline in 17 years.
Here are concerns
Many economists believe sales will fall again this year as the housing industry continues to work through an adjustment following a boom that was fueled by the lowest mortgage rates in four decades and speculative frenzy as investors rushed to cash in on soaring real estate prices.
Economists are now concerned that rising defaults in subprime mortgages, those offered to borrowers with weak credit, will trigger tighter lending standards that will make it harder for new buyers to qualify for loans. As borrowers default on their mortgages, that will dump more properties onto an already glutted market.