Existing-Home Sales Down, but Prices Rise

Existing-home sales fell as expected in December after first-time buyers rushed to complete deals during the months leading up to the original November deadline for the tax credit. However, prices rose from December 2008 and annual sales improved in 2009, according to the National Association of Realtors.

Existing-home sales—including single-family, townhomes, condominiums and co-ops—fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million units in December from 6.54 million in November, but remain 15 percent above the 4.74 million-unit level in December 2008.

There were approximately 5,156,000 existing-home sales in 2009, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008. It was the first annual sales gain since 2005.

Tax Credit Creates Swing in Market

Lawrence Yun, NAR chief economist, says there were no surprises in the data.

“It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,” he said. “We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010."

However, Yun says, the job market remains a concern and could dampen the housing recovery. "Job creation is key to a continued recovery in the second half of the year,” he says.

An NAR practitioner survey shows first-time buyers purchased 43 percent of homes in December, down from 51 percent in November. Repeat buyers rose to 42 percent of transactions in December from 37 percent in November; the remaining sales were to investors.

The national median existing-home price for all housing types was $178,300 in December, which is 1.5 percent higher than December 2008.

“The median price rose because of an increased number of mid- to upper-priced homes in the sales mix,” Yun says. It was the first year-over-year gain in median price since August 2007.

Falling Inventories

NAR President Vicki Cox Golder said market conditions are challenging in some areas.

“There’s a shortage of lower-priced homes for sale in much of the country, resulting in multiple bids in some areas,” she says. “Raw unsold inventory has been trending down. As the market heats up again this spring, buyers may need to be prepared to move quickly on a particular home."

Total housing inventory at the end of December fell 6.6 percent to 3.29 million existing homes available for sale, which represents a 7.2-month supply at the current sales pace. That is an increase from a 6.5-month supply in November.

Raw unsold inventory is 11.1 percent below a year ago, is at the lowest level since March 2006, and is 28.2 percent below the record of 4.58 million in July 2008.

Distressed homes, which accounted for 32 percent of sales last month, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes in the same area.

For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008. Distressed homes accounted for 36 percent of total sales last year.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.93 percent in December from 4.88 percent in November; the rate was 5.29 percent in December 2008.

Single-Family Home, Condo Sales Dip

Single-family home sales fell 16.8 percent to a seasonally adjusted annual rate of 4.79 million in December from a pace of 5.76 million in November. Sales are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5 percent to 4,566,000.

The median existing single-family home price was $177,500 in December, which is 1.4 percent above a year ago. For all last year, the median price for a single-family home was $173,200, down 11.9 percent from 2008.

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