Existing-home sales highest since 2009

"Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable," he said. 

There are still several issues hampering a speedier improvement, including limited housing inventory and tight credit conditions. 

Total inventory rose 9.6 percent to 1.94 million at the end of February, a 4.7-month supply at the current sales pace, up from 4.3 months in January, which was the lowest supply since May 2005. 

Listed inventory is 19.2 percent below a year ago when there was a 6.4-month supply.

Regionally, sales fell by 3.1 percent in the Northeast and by 1.7 percent in the Midwest. 

In the South, sales increased 2.6 percent and they were up in the West, the area most constrained by low supply, by 2.6 percent.

Meanwhile, the cost of purchasing a home remains inexpensive for those potential homeowners who can get loans. 

The average rate for the 30-year loan fell to 3.54 percent from 3.63 percent last week. That's near the record low 3.31 percent reached in November, Freddie Mac said Thursday.

The average rate on the 30-year loan has been below 4 percent for a full year.

"In the history of mortgage interest rates since 1971, the 30-year fixed rate has been below 4 percent in only 15 months, and those have all been in the past 15 months," said NAR President Gary Thomas, the broker-owner of Evergreen Realty in Villa Park, Calif.

"Even with rising home prices, affordability remains historically favorable because home prices over-corrected during the downturn. This means there is still great value for buyers in the current market."

Prices are showing sustained improvement, as well. 

The national median existing-home price for all housing types was $173,600 in February, up 11.6 percent from a year ago, the best showing since November 2005 when it was 12.9 percent above a year earlier.

The last time there were 12 consecutive months of year-over-year price increases was between June 2005 to May 2006. The February gain 

"A strong rise in home values is contributing to housing wealth recovery, which has risen by $1.4 trillion in the past year and looks to top that increase this year," Yun said. "The extra consumer spending arising from growth in housing wealth is expected to be $70 billion to $110 billion this year."

Distressed homes, foreclosures and short sales, accounted for 25 percent of February sales, up from 23 percent in January but down from 34 percent in February 2012.

First-time buyers accounted for 30 percent of purchases in February, unchanged from January.

All-cash sales were at 32 percent of transactions in February, up from 28 percent in January with investors, who account for most cash sales, purchasing 22 percent of homes in February up from 19 percent in January. 

"There was an upward bump in the shares of investor and all-cash closed purchases in February," Yun said. 

"These sales result from purchase offers during the holidays when shopping activity by traditional home buyers slows, but investors, who typically pay cash, remained active," he said. 

"This is a seasonal pattern, but we're now seeing a general increase in buyer traffic, which is 25 percent above a year ago."