Sales of existing homes jumped in December for the fifth month of sales increases within the past six months, a positive sign that the housing market continues to improve.
Sales of existing homes, including single-family, townhomes, condos, and co-ops, increased by a healthy 12.3% in December according to a report released today by the National Association of Realtors (NAR). At December’s seasonally adjusted annual rate of 5.28 million home sales, it was 2.9% lower than the sales pace of 5.44 million homes in December 2009.
Lawrence Yun NAR chief economist said, “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said.
Yun continued, “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
The relatively high level of distressed home sales continue to put downward pressure on the median sales price for existing homes. The median sales price of $168,800 in December was 1% below the median sales price a year ago.
Distressed home sales accounted for over a third of all existing home sales in December, at 36%. The percentage of distressed home sales in November was 33%, and 32% in October.
Yun said that distressed homes are typically discounted 10% to 15%, so the high percentage of distressed home sales is dragging down the median home price “but the flat price trend continues.”
The NAR reports that there were 3.56 million existing homes on the market in December, representing a 8.1 month supply at the current sales pace. November’s figures represent a 9.5 month supply of homes for sale.
NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said buyers are responding to very good affordability conditions despite tight mortgage credit. “Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” Phipps said. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”
While interest rates remain historically low, December saw an increase to 4.71% from 4.30% in November for 3- year fixed rate conventional mortgages..
In December, about one-third of homes were bought by first-time home buyers, and about one-fifth were bought by investors; the remaining homes were bought by repeat buyers.
By region, the West experienced the most dramatic increase in existing home sales, up by 16.7% in December but 1.5% lower than it was a year ago. The median home price in this region was $204,000, down by 5.6% from the previous year.
Existing home sales in the Northeast rose in December by 13% from the previous month but was 5.4% lower than in December 2009. The median home price of $237,300 was down by 1.4% from a year ago.
The Midwest had an 11% jump in existing home sales in December, but sales were 4.3% lower than they were in December 2009. The median home price of $139,700 was 3.3% higher than it was in the previous year.
Existing home sales in the South increased in December by 10.1% but were 2.5% lower than a year ago. The median home price of $148,400 was the same as it was in December 2009.
Source:
National Association of Realtors