Sales of existing homes increased in December 2008 by 6.5% according to a report issued by the National Association of Realtors(R) on Monday. The news came as a surprise to analysts who were heartened to learn that home inventory decreased for the month as well. The strongest sales were reported in the West.
According to the NAR, existing-home sales — including single-family, townhomes, condominiums and co-ops — jumped by 6.5% to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November, but was 3.5% below the 4.91 million-unit pace in December 2007.
Up For The Month, Down For The Year
For all of 2008 there were 4,912,000 existing-home sales, which was 13.1% below the 5,652,000 transactions recorded in 2007. The NAR says that this was the lowest volume since 1997 when there were 4,371,000 sales.
Lawrence Yun, NAR chief economist, said home prices continue to fall significantly. “It appears some buyers are taking advantage of much lower home prices,” he said. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future.”
Cracking The Five Percent Barrier
Buyers are also enjoying excellent mortgage rates as the rate for a thirty year fixed mortgage continues to flirt with the 5% level. Though rates climbed to an average of 5.42% on Monday, SayEducate.com has discovered that some mortgage providers are offering rates below 5% to highly qualified buyers. Please visit our companion site, SayLending.com for current rate information.
Yun said the market is underperforming and hurting the broader economy. “We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected,” he said. “Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”
The NAR also reported that the national median existing-home price for all housing types was $175,400 in December, a drop from December 2007 when the median was $207,000. The NAR says that there remains a significant downward distortion in the current median from a large number of distress sales at discounted prices, currently 45% of transactions; the median is where half of the homes sold for more and half sold for less. For all of 2008, the median price was $198,600, down 9.3 percent from $219,000 in 2007.
Source: National Association of Realtors
Photo Credit: Laura Leavell
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