Existing home sales increased 2.9% in February to a seasonally adjusted 4.89 million-unit rate, the National Association of Realtors announced yesterday.

The sales increase to 5.03 million compared to the 4.850 million-unit pace predicted by IFR Markets’ poll of economists and followed an unrevised 0.4% drop to a 4.89 million unit level in January.

On a year-over-year basis, though, sales overall were down 23.8% from a 6.60 million-unit sales pace.

“We’re not expecting a notable gain in existing home sales until the second half of this year, but the improvement is another sign that the market is stabilizing,” said NAR senior economist Lawrence Yun. “Buyers taking advantage of higher loan limits for both FHA and conventional mortgages will unleash some pent-up demand. As inventories are drawn down, prices in many markets should go positive later this year.”

Sales rose in three of the four regions of the country last month, increasing 11.3% in the Northeast, 2.5% in the Midwest, and 2.1% the in South. Sales slid 1.1% in the West.

Inventory levels fell 3.1% at the end of February to 4.034 million existing homes for sale, representing a 9.6-month supply at the current sales pace, down from 10.2 months the month before.

Meanwhile, the median existing home price was $195,900 in February, off 1.9% from January, when the median price was $199,700, and slid 8.2% year-over-year from a $213,500 level.

The average existing home price was $241,900 in February, down 1.5% from January when the average price was $245,500, and dipped 7.0% year-over-year from a $260,000 level.

The national average 30-year, fixed-rate mortgage was 5.92%, up from January’s 5.76%, NAR said. The rate was 6.29% in February 2007.

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