Existing Home Sales Up; Foreclosures Pressure Prices

January 25, 2011 (Chris Moore)
mortgage-gorilla-image
Existing homes sales shot up 12.3% in December, coming in well above most analysts’ estimates and marking growth in five of the final six months of 2010, but there was still an 800 pound gorilla in the room…distressed properties.

The National Association of Realtors (NAR) said seasonally adjusted sales rose to an annualized rate of 5.28 million last month from 4.7 million for November, which was upwardly revised a few thousand. The monthly rate is down 2.9% from the 5.44 million units in December 2009.

Single-family home sales jumped 11.8 percent to a seasonally adjusted annual rate of 4.64 million in December from 4.15 million in November, but are 2.5 percent below the 4.76 million levels in December 2009. Existing condominium and co-op sales surged 16.4 percent to a seasonally adjusted annual rate of 640,000 in December from 550,000 in November, but remain 5.2 percent below the 675,000-unit pace one year ago.

“December was a good finish to 2010, when sales fluctuate more than normal,” NAR Chief Economist Lawrence Yun said. “The pattern over the past six months is clearly showing a recovery. 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.”

NAR said the median existing-home price in December was $168,000, down 1% from a year earlier, which was attributed to the number of distressed properties sold during the month. The level of distressed-home sales last month rose to 36% of the existing-home market, up from 33% in November and 32% a year earlier.

“The modest rise in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price in December, “ Yun explained.

Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale (not including the “shadow” inventory), which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.

Regionally, existing-home sales in the Northeast jumped 13.0 percent to an annual pace of 870,000 in December but are 5.4 percent below December 2009. The median price in the Northeast was $237,300, which is 1.4 percent below a year ago.

Existing-home sales in the Midwest rose 11.0 percent in December to a level of 1.11 million but are 4.3 percent below a year ago. The median price in the Midwest was $139,700, up 3.3 percent from December 2009.

In the South, existing-home sales increased 10.1 percent to an annual pace of 1.97 million in December but are 2.5 percent below December 2009. The median price in the South was $148,400, unchanged from a year ago.

Existing-home sales in the West surged 16.7 percent to an annual level of 1.33 million in December but remain 1.5 percent below December 2009. The median price in the West was $204,000, down 5.6 percent from a year ago.

“Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market,” said NAR President Ron Phipps. “Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010.”

Tags: NAR, existing home sales, single-family homes, distressed properties, median home price, housing inventory, low mortgage rates