WASHINGTON, March 21 (Reuters) – U.S. home sales fell in February, but upward revisions to the prior month’s pace and the first yearly increase in prices in 15 months pointed to steady improvement in the housing market.

Existing home sales fell 0.9 percent in February from January but still notched their second highest level since May 2010, the National Association of Realtors said on Wednesday.

“We are starting to improve slowly. There is some encouraging news, but the dramatic things that need to happen to really turn the market around aren’t there,” said Mitchell Hochberg, Principal at Madden Real Estate Ventures in New York.

Realtors say the labor market needs to strengthen significantly and banks must ease lending conditions, which every month result in about a third of contracts being canceled, for a decisive recovery to take root.

Job creation has stepped up in recent months, with employers adding a total of 734,000 jobs to their payrolls over the last three months. However, the unemployment rate remains at a very high 8.3 percent.

Despite the weak sales pace last month, the median home price rose 0.3 percent from a year ago to $156,600 – the first yearly increase since November 2010 – adding to signs of a budding recovery.

Data on Tuesday showed permits to build homes rose to a near 3-1/2 year high in February, and a report on Friday is expected to show new home sales increased last month.

Some economists said smoothing out the data to account for the extra day in February could have contributed to the surprise drop in sales last month. Economists polled by Reuters had expected sales to rise to a 4.62 million pace.

“Using last year’s seasonal adjustment factor instead of this leap year’s, existing home sales would have actually risen by 3.0 percent month on month to 4.77 million units,” said Ellen Zentner, an economist at Nomura Securities in New York.

The data had little impact on U.S. financial markets, though sales prices for U.S. Treasury debt saw some flight to safety trades.

SALES TRENDING HIGHER

Since bottoming around a 4.05 million-unit pace in July, home resales have largely held up.

Compared with February last year, sales were up 8.8 percent and according to JPMorgan economist Daniel Silver, the gains were tracking a seasonally adjusted annualized rate of 30 percent so far this quarter.

“The unusually mild winter may have helped boost existing home sales in recent months, but we do not think this is the only factor driving up sales,” said Silver.

“The upward trend in the data began before the abnormal weather started, and we do not see a statistically significant relationship between deviations from normal temperatures and existing home sales during winter months.”

But recovery will not be easy and mortgage rates have spiked in recent weeks. Demand for home loans fell last week partly in response to rising rates. Fixed 30-year mortgage rates increased 13 basis points to average 4.19 percent last week.

Sales last month were mixed, declining sharply in the Northeast and West. They were up in the Midwest and South.

The housing market continues to be choked by a glut of unsold properties, which are weighing down prices.

Last month, the inventory of unsold homes on the market increased 4.3 percent to 2.43 million units – representing 6.4 months’ supply, up from 6.0 months in January. These number were not adjusted for seasonal fluctuations.

When adjusted for these variations, the months’ supply edged down to 6.5 months’ worth from 6.6 months in January. A supply of six months generally is considered ideal, with higher readings pointing to price declines.

Inventories are well below their 4.04 million units peak in July 2007 and in some parts of the country, which were not severely affected by the recession, realtors are actually short of property to sell.

“Our biggest problem is the lack of inventory,” said John Ford, owner of Ford Realty in Boston. “If the property is priced correctly, we have bidding wars,” said Ford, who operates in one of Boston’s upscale areas.

A separate report from CoreLogic showed the number of properties in the foreclosure pipeline fell 11.1 percent to 1.6 million units in January from a year ago, representing 6 months’ worth of supply.

Last month distressed properties – foreclosures and short sales – which typically occur at deep discounts, made up a third of overall sales last month.

Investors bought 23 percent of homes sold last month, with first-time buyers accounting for about a third of the transactions.

WASHINGTON (MarketWatch) — President Barack Obama on Wednesday urged Congress to act on his plan to give homeowners a chance to refinance at historically low interest rates and released details of his proposal.

Obama rejected arguments that only time would heal the housing market. Data released Tuesday showed house prices have dropped by nearly a third from their peak. See story on house prices.

“It is wrong for anybody to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom,” Obama said in a speech in a Washington, D.C., suburb.

Some Americans with good credit and clean payment histories are rejected for refinancing because their mortgages are bigger than the current prices of their homes, a term called being “under water.” Obama said more than 10 million homeowners have underwater mortgages.

Last week in his State of the Union address to the nation and members of Congress, Obama said the new refinance program would result in “no more red tape, no more runaround from the banks.” Read ‘Obama calls for economy built to last”

Almost as soon as Obama finished his speech to Congress last week, analysts expressed scepticism that the plan could pass Congress. Read ‘Obama refi plan has bumpy road ahead’

The White House has already set up a plan, called the Home Affordable Refinance Program, to help borrowers refinance whose loans are backed by Fannie Mae and Freddie Mac.

But so far, the programs “have not worked on the scale we had hoped — not as many people have taken advantage of it as we wanted,” Obama said.

Yelena Shulyatyeva, an economist with BNP Paribas, said Obama’s plan “would potentially have a significant impact” and estimated that more than 1 million homeowners would be eligible.

But Shulyatyeva said, “Overall we think it is not a game-changer” because Republicans in Congress are unlikely to go along with it.

Rep. Scott Garrett, a Republican from New Jersey who is chairman of the House subcommittee that oversees Fannie Mae and Freddie Mac, rejected Obama’s proposal as government intrusion in markets.

“Until the president gives up his crusade to increase the government’s interference in the housing market, home foreclosures will continue to rise, our economy will falter and every American’s share of the national debt will continue to grow,” Garrett said.

Obama said the new plan is not designed to help irresponsible borrowers or speculators.

The new program would focus on borrowers whose loans are not owned by Fannie Mae or Freddie Mac and operate through the Federal Housing Administration.

Garrett said the FHA is “already on a collision course with bankruptcy” and the Obama plan will only make that “disastrous situation worse.”

To qualify, borrowers would need to be current on loans for the past six months and have missed no more than one payment in the prior six months.

Borrowers would need a minimum credit score of 580. The White House said that nine out of 10 borrowers have a credit score adequate to meet that requirement.

The mortgages to be refinanced must be for an owner-occupied principal residence.

The loans could not be larger than current FHA conforming loan limits that range as high as $729,750 in high cost areas.

Borrowers would not have to submit a new appraisal or tax return. A lender would only have to confirm that the borrower is employed. Some unemployed homeowners might also qualify, the White House said.

The cost of the program is estimated between $5 and $10 billion, to be financed by a fee on large financial firms, the White House said. Congressional Republicans have said they will oppose any such fee.

The administration is also asking Congress to streamline refinancing to all borrowers with Fannie Mae and Freddie Mac loans.

The White House expressed frustration with the Federal Housing Finance Agency, which at the moment is being run by Ed DeMarco.

While the White House argues that the government-sponsored giants could have acted, “the GSE’s have not acted, so the White House is calling on Congress to do what is in the taxpayer’s interest,” the statement said.

The steps include eliminating appraisal costs for all borrowers, increasing competition so borrowers can get the best possible deal and extending streamlined refinancing for all GSE borrowers.

Mitchell Hochberg, managing principal of Madden Real Estate Ventures, a real estate firm in New York, said that in the final analysis, Obama’s refinance proposal was simply “window dressing in an election year.”

“What they’ve done is very interesting in my opinion, but at the end of the day it doesn’t address the heart of the matter, which is the economy,” he said.

“Unless the economy is fixed, the housing market is not going to recover,” he said.

In a separate release, the FHFA asked investors to contact the agencv if they are interested in participating in a foreclosure to rental program.

Shulyatyeva said she was disappointed with the lack of detail in the FHFA release.

MIDTOWN — Booming construction from West 54th to West 36th streets has put the city on track to hit 90,000 hotel rooms by the end of the year — a whopping 24 percent gain since 2006 — and with an additional 7,000 rooms now in the pipeline, there are no suggestions it’s slowing down.

“It’s the fastest pace that the city has ever seen in terms of hotel development,” said Kimberly Spell, chief communications officer at NYC & Company, the city’s tourism division.

But the huge rate of growth has prompted some to question in New York can attract enough visitors to fill the rooms.

NYC & Company expects to welcome 40 new projects over the next 30 months. And while the outer boroughs comprise an increasing chunk of that growth, 22 new hotels, complete with 4,120 rooms, are now under construction in Manhattan alone.

Harry Gross’ new 67-story Marriott hotel is rising at the corner of Broadway and West 54th Street. It promises to be the tallest in the city. (Marriott International, Inc. )

The city’s largest hotel project, a 68-story high-rise that will one day house twin Marriott hotels, is now rising along Broadway and West 54th Street. Closer to Eighth Avenue, construction is underway on a new 34-story hotel with mystery backers.

Further south, more rooms are coming to West 36th Street between Fifth and Sixth avenues, with a new 188-room Hyatt Place at 52 W. 36th St., a Holiday Inn Express at 60 W. 36th St. and a proposed 17-story Ideal Hospitality project at 48 W. 36th St.

“Overbuilding has always been a negative in this industry,” said Joseph Spinnato, president and CEO of the Hotel Association of New York, which has been overseeing the industry in the city for more than 130 years.

Spinnato said that while there are some in the industry who believe the city is approaching its saturation point, he’s convinced there’s still growing room.

“When is the glass truly full? I don’t know. But right now… there are markets that haven’t fully been tapped.”

Driving the embrace of the hotel boom is the fact that, despite the growing number of rooms, the city continues to enjoy the highest occupancy rates in the nation — close to 85 percent of rooms filled last year.

Room rates also appear to be recovering following the crash, with visitors paying $261 per night on average so far in 2011, city numbers show.

Again and again analysts said they are confident that the city will be able to absorb the new rooms.

“I think there is a significant reservoir of unaccommodated demand,” said John Fox, senior vice president at PKF, a leading hotel consulting firm, who noted that part of what has made the industry so strong is that it can benefit from a weak economy.

When the dollar’s low, he noted, tourists are drawn from overseas. At the same time, Americans who may have otherwise boarded flights to London or Paris, come to New York instead.

Still, he said the room boom will likely have at least a minimal impact on existing rates.

“There likely will be a dampening down of the occupancy rate because of the openings,” he said.

Some credit the hotel boom to developers catching up on stalled projects as the economy improves.

“Things really slowed down after Lehman,” said Jordan Barowitz, director of External Affairs at the Durst Organization, who said that, while the market hasn’t improved as much as many would have liked, many new projects appear to be coming online.

“The pipeline has been moving much more slowly,” he said.

But now, “Stuff is finally going to shake loose,” he said.

Roland deMilleret, managing director of the New York office of HVS Global Hospitality Services, who specializes in the Manhattan market, said that financing essentially “disappeared” in Sept. 2008 because of the crash, with no money available in 2009 or 2010.

While several projects backed by big brands in premium locations have been lucky to secure backing this year, he says the real boom is going to hit in 2014, 2015 and 2016.

“At that time we’re going to see a huge spike in new supply,” he said, adding that, even then, supply will likely lag behind growing demand.

Mitchell Hochberg, the principal of Madden Real Estate Ventures who currently serves on the Board of Directors of Orient-Express Hotels, credited the recession for helping to “keep the lid on the market” and preventing overbuilding in recent years.

But he cautioned that, while certain sectors of the market may have lots of growing room, others may be saturated already.

There’s been relatively little growth in the luxury market, leaving room there, he said. And while there’s been a large increase in the number of “select service” hotels, like Courtyard by Marriott and Garden Inn, there appears to be growing demand.

The one space where he sees the potential for too many rooms is in the boutique sector, which has seen numerous newcomers open their doors. To stand out from the crowd, he predicted more branded hotels affiliated with national chains and special features to create buzz.

At the same time, more tourists have been flocking to the city than ever before. NYC & Company expects to hit an unprecedented 50 million tourists before January 1st — a year ahead of schedule.

Many in the industry credit the company for helping to lure new visitors to the city that had never come in large numbers before. The city, for instance, welcomed a whopping 77 percent more tourists from Brazil in 2010 than 2009, thanks to aggressive marketing and partnership efforts, said Spell.

Next year, the group is hoping to turn its focus to India and China, with plans to work with the federal government to push for visa waivers and improve the welcome process to help unlock new demand.

While some, including the author of a recent article in New York Magazine, have questioned whether the city will really be able to continue luring as many tourists in the long run as it has in recent years, Spell shunned the b-word: bubble.

“I think the very definition of a bubble is something that has artificially grown and therefore can’t sustain itself. But we’ve created new infrastructure,” she said.

“This is a change in how we do business,” she said. “It’s not going away.”

And those jumping into the industry, like Damon Pazzaglini, the chief operating officer at Durst Fetner Residential, are banking on it.

Pazzaglini has recently partnered with Ian Schrager to open a new PUBLIC New York Hotel at 855 Sixth Avenue, between West 30th and West 31st streets — marking his first foray into the hotel industry. He said that he’s confident in the city’s market and potential for growth.

“The demand is higher today than at any other point in the history of New York City,” said Pazzaglini, who said he feels safe, even if the market stalls.

“We’re so far ahead of all other markets,” he said.  “With that kind of cushion, [there's a lot] we could absorb.”

New-home sales fell shy of forecasts — another break in the recent chain of better-than-expected data — but stocks are shaking it off pretty easily.

Sales “rose” 1.3% to an annualized pace of 307,000 units in October, the Commerce Department said, shy of the 312,000 economists expected.

That was up from 303,000 in September, but September’s pace was revised dramatically lower, down from 313,000 units.

“The report shows we continue to bounce along the bottom,” Mitchell Hochberg, principal at Madden Real Estate Ventures in New York, wrote in an email. “Until there’s strong economic growth and job creation there will no housing industry recovery.”

Stocks aren’t caring, focused more on their need to bounce after last week’s selloff. The Dow is up 303 points, the S&P is up 3% and the Nasdaq is up 3.4%.

U.S. says new-home sales rose to an annual rate of 307,000 in October, seasonally adjusted, up from 303,000 the previous month. The median sale price, hurt by weak demand, fell to $212,300.

Weak demand for new homes has kept prices low and forced builders to delay projects. Above, a house is under construction in Palo Alto. (Paul Sakuma, Associated Press / November 22, 2011)

Sales of new single-family homes were barely changed in October and there was little evidence of any improvement in the slumping U.S. housing market.

The U.S. government said new-home sales edged up to an annual rate of 307,000 in October, seasonally adjusted. Sales for September were revised down to 303,000 from an original reading of 313,000.

Economists polled by MarketWatch had forecast new-home sales to rise to 320,000 in October. In a healthy market, sales are typically two to three times that level.

Weak demand for new homes has kept prices low and forced builders to delay projects. The median sale price declined $1,000, to $212,300, in October and the supply of homes on the market fell slightly to 6.3 months — the lowest level in 11/2 years.

Many prospective buyers have turned to previously owned homes in search of better deals while the nation’s high 9% unemployment rate has limited the pool of potential customers despite ultra-low interest rates.

“The report shows we continue to bounce along the bottom,” said Mitchell Hochberg, principal of Madden Real Estate Ventures in New York. He said the housing industry won’t recover “until there’s strong economic growth and job creation.”

New-home sales are 8.9% higher compared with a year earlier, however. In 2010 the housing market posted its worst year of sales since the government began keeping records in the early 1960s.

Half the new homes sold were purchased in the South, but sales in that region fell 9.5% to an annual rate of 153,000 compared with a month earlier.

Sales in the West rose almost 15% to a rate of 77,000, while sales in the Midwest rose 22% to an annual rate of 55,000.

Sales in the Northeast were unchanged at a rate of 22,000.

Data for new-home sales often fluctuate sharply from month to month, and economists look at a longer time frame to gauge market trends. New-home sales averaged an annual rate of 301,000 during the three-month period of August to October, slightly more than in the same period last year.

New-home sales are counted when contracts are signed.

Bartash writes for MarketWatch.com/McClatchy.