Existing-home sales continued on an uptrend in December, rising for a third consecutive months and remaining above a year ago, according to the NATIONAL ASSOCIATION OF REALTORS®.
The latest monthly data shows 4.61 million existing homes changed hands in December, up 5.0% from November, and 3.6% from December 2010. The data includes single-family homes, townhomes, condominiums, and co-ops sold through local multiple listing services.
The increased sales is an early sign of what may be a sustained recovery, says NAR Chief Economist Lawrence Yun. “The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth, and bargain home prices are giving more consumers the confidence they need to enter the market.”
For all of 2011, existing-home sales rose 1.7% to 4.26 million up from 4.19 million in 2010.
Increased sales will help the overall economy, said NAR President Moe Veissi. “We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”
Supply of homes drops
At the end of December, there were 2.38 million homes for sale. That’s a 6.2-month supply, down 9.2% from the 7.2-month supply of homes for sale in November. The number of U.S. homes for sale has fallen from a peak of 4.04 million in July 2007 and is now at its lowest level since March 2005, when there were 2.30 million homes on the market.
“The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future,” Yun said.
Foreclosures still influencing housing markets
Foreclosed homes continue to influence local housing markets. Foreclosures sold for an average discount of 22% in December, up from 20% a year ago, while short sales (where the home sold for less than the amount of the outstanding mortgage) closed 13% below market value compared with a 16% discount in December 2010.
The national median existing-home price for all housing types was $164,500 in December, which is 2.5% below December 2010. Distressed homes — foreclosures and short sales — accounted for 32% of sales in December (19% were foreclosures and 13% were short sales), up from 29% in November; they were 36% in December 2010.
All-cash sales accounted for 31% of purchases in December, up from 28% in November and 29% in December 2010. Investors account for the bulk of cash transactions.
Investors purchased 21% of homes in December, up from 19% in November and 20% in December 2010. First-time buyers fell to 31% of transactions in December from 35% in November; they were 33% in December 2010.
Mortgage credit still tight
Buyers and selling continued to have problems getting home sales closed last month. Contract failures were reported by 33% of NAR members in December, unchanged from November; they were 9% in December 2010.
Although closed sales are holding up better than this finding would suggest, contract cancellations are caused largely by declined mortgage applications and failures in loan underwriting from appraised values coming in below the negotiated price, Yun said.
Single-family sales up
Single-family home sales increased 4.6% to 4.11 million in December from 3.93 million in November, and are 4.3% higher than the 3.94 million-unit pace a year ago. The median existing single-family home price was $165,100 in December, which is 2.5% below December 2010.
Existing condominium and co-op sales rose 8.7% to 500,000 in December from 460,000 in November, but are 2.0% below the 510,000-unit level in December 2010. The median existing condo price was $160,000 in December, down 3.0% from a year ago.
Home sales rise in all regions
Regionally, existing-home sales in the Northeast jumped 10.7% to an annual pace of 620,000 in December, and are 3.3% above a year ago. The median price in the Northeast was $231,300, which is 2.7% below December 2010.
Existing-home sales in the Midwest rose 8.3% in December to a level of 1.04 million, and are 9.5% above December 2010. The median price in the Midwest was $129,100, down 7.9% from a year ago.
In the South, existing-home sales increased 2.9% to an annual level of 1.76 million in December, and are 3.5% above a year ago. The median price in the South was $146,900, down 1.1% from December 2010.
Existing-home sales in the West rose 2.6% to an annual pace of 1.19 million in December, but are 0.8% below December 2010. The median price in the West was $205,200, up 0.3% from a year ago.