Valley home sales down again

STAFF/WIRE REPORT

Sales of existing homes took an unexpected jump nationally in February but took another drop in the Mahoning Valley.

The national increase was the largest jump in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties.

The flood of buyers didn’t reach the Mahoning Valley, however. Sales of single-family homes fell 9 percent in Mahoning County, 22 percent in Trumbull County and 43 percent in Columbiana County, compared with numbers from February 2008.

Eric Caspary, president of the Youngstown Columbiana Association of Realtors, said all the elements are there for a local rebound. Prices have been forced down by an abundance of foreclosed homes, and interest rates are low, he said.

“Our real test will be March, April and May. That’s the typical market when homes start to sell,” he said.

If local sales don’t revive then, 2009 will be a tough year for the local housing market, he said.

When compared with February 2008, average sale prices last month were down 11 percent in Mahoning County and 6 percent in Trumbull, but they were up 3 percent in Columbiana County.

Nationally, prices are expected to keep falling well into the year. Tens of thousands of homes remain tied up in the foreclosure process and are not yet for sale. Plus, as the recession deepens and job losses mount, many buyers are likely to stay on the sidelines.

“The four-letter word in the housing market is ‘jobs,’” said Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies. “If you’re worried about having a job tomorrow, you’re not likely to buy a home now.”

The National Association of Realtors said Monday that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million last month, from 4.49 million units in January.

It was the largest monthly sales jump since July 2003, with first-time buyers accounting for about half of all transactions. Sales had been expected to dip to an annual pace of 4.45 million units, according to Thomson Reuters. The results, which came after a steep decline in January, mean that sales activity has returned to December’s levels, but still remains lower than most of last year.

“If January was a disaster for housing, February may be the rebound month,” wrote Joel Naroff, president of Naroff Economic Advisors.

The sales figures don’t yet reflect the new $8,000 tax credit designed to lure even more first-time buyers into the market. That should juice up early summer sales, but how much will depend on the overall condition of the U.S. economy.

“If the economy stabilizes around midyear and financial conditions improve, then sales will probably begin to slowly increase as buyers step back into the market,” wrote JPMorgan Chase analyst Abiel Reinhart. “An important reason for this is that affordability has already increased sharply, both as a result of lower prices and lower mortgage rates.”

The median sales price plunged to $165,400, down 15.5 percent from $195,800 a year earlier. That was the second-largest drop on record and prices are now off 28 percent from their peak in July 2006.

SEE ALSO: Local housing market details.