December Existing Home Sales down, but prices rise in 2009

After a rising surge from September through November, existing-home sales fell as expected in December after first-time buyers rushed to complete sales before 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 rate¹ of 5.45 million units in December from 6.54 million in November, but remain 15.0 percent above the 4.74 million-unit level in December 2008.

For all of 2009 there were 5,156,000 existing-home sales, which was 4.9 percent higher than the 4,913,000 transactions recorded in 2008; it was the first annual sales gain since 2005.

Lawrence Yun, NAR chief economist, said 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, 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.”

An NAR practitioner survey² 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 price³ 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 said. It was the first year-over-year gain in median price since August 2007.

NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., 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 said.

“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 – the best advice is to begin working with a Realtor® now to be able to use the tax credit and benefit from the increased buying power in the current market,” Golder said.

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 supply⁴ at the current sales pace, up 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 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, but are 12.7 percent above the 4.25 million level in December 2008. For all of 2009, single-family sales rose 5.0 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 single-family median was $173,200, down 11.9 percent from 2008.

Existing condominium and co-op sales fell 15.4 percent to a seasonally adjusted annual rate of 660,000 in December from 780,000 in November, but are 34.7 percent higher than the 490,000-unit pace a year ago. For all of 2009, condo sales rose 4.8 percent to 590,000 units.

The median existing condo price⁵ was $183,700 in December, up 1.0 percent from December 2008. For all of last year, the median condo price was $176,100, which is 16.1 percent below 2008.

Regionally, existing-home sales in the Northeast dropped 19.5 percent to an annual level of 910,000 in December but are 21.3 percent above a year ago. The median price in the Northeast was $241,700, up 3.2 percent from December 2008.

Existing-home sales in the Midwest fell 25.8 percent in December to a level of 1.15 million but are 8.5 percent higher than December 2008. The median price in the Midwest was $143,200, which is 1.8 percent above a year ago.

In the South, existing-home sales dropped 16.3 percent to an annual pace of 2.01 million in December but are 15.5 percent above December 2008. The median price in the South was $152,000, down 1.0 percent from a year ago.

Existing-home sales in the West declined 4.8 percent to an annual rate of 1.38 million in December but are 15.0 percent higher than a year ago. The median price in the West was $236,000, up 2.7 percent from December 2008.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.