U.S. home resales dropped slightly in February to a 19 month-low as cold weather and a shortage of homes for sale continued to sideline potential buyers. A separate survey showed factory activity in the U.S. mid-Atlantic region expanded far more than expected in March.
The National Association of Realtors said on Thursday home sales dropped 0.4 percent to an annual rate of 4.60 million units, the lowest level since July 2012, and in line with economists' expectations. January's sales pace was unrevised at 4.62 million.
Even though temperatures remained chilly in February, pinching sales, a modest improvement in inventory on the market indicates buyers are expected to jump in soon.
"The weather surely cannot get any worse," NAR economist Lawrence Yun told reporters. "The new supply will help tame price growth."
The median existing home price rose 9.1 percent in February to $189,000 from the same month in 2013.
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Mortgage rates have risen almost a full percentage point in the past year and the increase in house prices has far outpaced income growth, making home-buying less affordable.
In addition, there has been a shortage of homes for sale on the market. Home resales have declined in six of the last seven months, having peaked in July.
The number of previously-owned homes available for sale at the end of February represented a 5.1 months' supply, still tepid but up from 4.9 months' worth in January. A healthy market has about a six-to-seven month supply.
Economic activity gauge rises
Separately, a gauge of future U.S. economic activity rose more strongly than expected in February, a sign that a harsh winter may only create a temporary drag on the economy.
The Conference Board said on Thursday that its Leading Economic Index climbed 0.5 percent to 99.8 last month.
Economists polled by Reuters had expected the index to gain 0.2 percent. The rise in January was revised to 0.1 percent from 0.3 percent.
Philly Fed factory activity index jumps
Factory activity in the U.S. mid-Atlantic region expanded far more than expected in March, a survey showed on Thursday.
The Philadelphia Federal Reserve Bank said its business activity index rose to 9.0 in March from -6.3 in February, topping economists' expectations for 3.8, according to a Reuters poll.
Any reading above zero indicates expansion in the region's manufacturing. The survey covers factories in eastern Pennsylvania, southern New Jersey and Delaware.
The new orders index rose to 5.7 from -5.2. The employment component grew at a slower clip, however, coming in at 1.7, the lowest since June, versus 4.8 last month.
Survey respondents' view on business conditions six months ahead fell to 35.4 from 40.2.
The Philly Fed business index is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management.