Existing-Home Sales Jump

Inventories also rise.
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Updated from 10:33 a.m. EDT

Sales of existing homes climbed nearly 4% in February, beating economists' estimates, though inventories also rose from January.

Sales of single-family homes and condos came in at a seasonally adjusted annual level of 6.69 million units in February, up 3.9% from a downwardly revised level of 6.44 million in January, the National Association of Realtors said Friday. Sales were down 3.6% from the same period a year earlier.

Economists expected a sales rate of 6.35 million homes, according to

Reuters

estimates.

"It's obviously a net positive in terms of the market. It's the third consecutive month of increases," says Phillip Neuhart, an economic analyst with Wachovia.

However, it's important to remember that existing-home sales data lags the broader market since the numbers are based on closings, which typically take place about two months after homes go to contract. During the past two months, several subprime lenders have shut down business and federal regulators are exploring ways to rein in risky mortgage originations.

"Some tightening of lending standards is likely to make these numbers volatile as we enter warmer months," Neuhart says. "I'm not so sure we've seen the worst, because these data lag the broader market."

Total housing inventory levels rose 5.9% at the end of February to 3.75 million existing homes available for sale, which represents a 6.7-month supply at the current sales pace. In January, there was a 6.6-month supply of homes.

Raw inventories peaked last July at 3.86 million homes, and the month-supply level hit a high of 7.4 months in October.

The national median existing-home price for all housing types was $212,800 in February, down from $215,700 a year earlier. The median is a typical market price where half of the homes sold for more and half sold for less.

Shares of homebuilders were modestly higher after the report.

Pulte Homes

(PHM) - Get Report

was up 22 cents, or 0.8%, to $27.71;

Ryland

(RYL)

was adding 39 cents, or 0.8%, to $46.63; and

Toll Brothers

(TOL) - Get Report

was gaining 19 cents, or 0.7%, to $29.62.