U.S. Sales of previously owned homes unexpectedly climbed in February as record foreclosures brought bargain hunters into the market to take advantage of lower prices. Purchases increased 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales. The Obama administration today announced details of a plan to buy up to $1 trillion in troubled assets, building on the Federal Reserve’s initiative to commit as much as $1.1 trillion more to unclog credit markets. Access to financing and a drop in borrowing costs that has made home buying more affordable may help limit further declines in sales as the jobless rate climbs. “The decline in home prices and presence of deeply discounted foreclosures has increased affordability and enticed bargain hunters,” Michelle Meyer, an economist at Barclays Capital Inc. in New York, said before the report. “However, rising unemployment, depressed confidence and expectations of home-price depreciation serve as powerful offsets.” Economists forecast resales would fall to a 4.45 million annual rate, according to the median of 65 projections in a Bloomberg News survey. Estimates ranged from 4.26 million to 4.75 million. Stocks Gain Stocks extended gains following the report. The Standard & Poor’s 500 Index climbed 3.3 percent to 793.76 at 10:07 a.m. in New York. The S&P homebuilder composite index was up 7.4 percent. Sales were down 4.6 percent compared with a year earlier. The number of unsold homes on the market at the end of February represented 9.7 months’ worth at the current sales pace, the same as in January. The group has said a five to six months supply is usually consistent with a balanced market. The median price of an existing home decreased to $165,400 from $195,800 in February a year earlier. The median listing price rose in California last month for the first time in three years, said Lawrence Yun, the real- estate agents group’s chief economist. Resales of single-family homes increased 4.4 percent to an annual rate of 4.23 million. Sales of condos and co-ops climbed 11.4 percent to a 490,000 rate. Broad-based Gain All four regions showed and increase in sales last month, led by a 15.6 percent gain in the Northeast. Home sales have been falling since 2005 and prices peaked in 2006. The S&P/Case-Shiller home-price index of 20 metropolitan cities was down 18.5 percent in December from a year earlier, a record decline, the group said last month. The drop in prices and declining mortgage rates have made buying a home more attractive. The National Association of Realtors affordability index reached a record high in January. Home foreclosures were up 30 percent in February from a year earlier, according to RealtyTrac Inc., an Irvine, California-based seller of default data. A total of 290,631 properties got a default or auction notice or were seized by banks. Properties that received a foreclosure filing for the first time totaled 161,976, the highest in RealtyTrac records dating to January 2005. Fed policy makers last week announced the central bank will buy as much as $300 billion in long-term Treasuries and more than double mortgage-debt purchases to $1.45 trillion. The central bank had already committed to buying $600 billion of mortgage-backed securities and bonds sold by government- sponsored housing agencies. Obama Plan The Obama administration plans to use up to $100 billion of the $700 billion in bailout money to spur a public/private effort to purchase illiquid securities and loans that caused credit to dry up. Officials have also pledged to spend $275 billion to help keep as many as 9 million Americans in their homes and stem the rise of foreclosures. The program includes a tax break of as much as $8,000 for first-time homebuyers that wouldn’t require repayment. Buyer traffic was up 5 percent last month, said Charles McMillan, NAR’s president and an agent in the Dallas-Fort Worth area. “It appears most of the increase in buyer traffic occurred in the latter part of the month after the $8,000 first- time buyer tax credit was put in place,” he said in a statement. “We expect to see sales picking up” around the middle of the year, he said. Growth Forecasts Rising foreclosures initiated the credit crisis that has deepened a U.S. recession now in its second year. Economists surveyed by Bloomberg this month projected the economy will continue to contract at least through the first half of this year and that unemployment will climb to 9.4 percent by the end of 2009 and remain elevated through at least 2011. Distressed sales are hurting builders. Toll Brothers Inc., the largest U.S. builder of luxury homes, this month reported its sixth consecutive quarterly loss. Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, had a 10th straight quarterly loss. “We expect demand for all homes, both new and existing, to remain far below normalized levels,” Chief Executive Officer Ara Hovnanian said in a March 10 statement.

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