Housing Numbers Paint Blurry Picture

Washington—With interest rates inching up, higher gas prices settling in and the employment outlook still obscured, the nation's housing market remained unsettled during February, sending out mixed signals for a third straight month.

The highly volatile gauge of expensive new homes advanced 9.4 percent during February, recovering from a slide of 8.6 percent the month before. But the other two key indicators — existing home sales and housing starts — both sputtered, stuck in neutral.

The key gauge of lower-cost existing home sales, often starter homes or second homes, slipped 0.4 percent, to a seasonally adjusted level of 6.8 million units. Sales of existing homes are now down 3.3 percent from a 13-month high of 7 million units recorded last June. Still, with interest rates near historic lows, if rising, resales remain sturdy, up 6.1 percent from a 13-month low of 6.4 million units in February 2004.

Housing starts, the most forward-looking barometer, lost some steam during February, edging up just 0.5, weakening after a solid 6.2 percent increase the month before.

David Lereah, chief economist of the National Association of Realtors, the nation's largest housing trade group, said the market appears to be in the early stages of settling down.

"In essence, home sales were surging at unprecedented levels for most of last year. The cooling we expect in sales this year means we'll be transitioning from a white-hot housing market into a very strong market that still favors home sellers, but should become more balanced as the year progresses," he said.