Existing Home Sales Rise as Prices Plummet

Existing-home sales jumped 6.5 percent in December to a seasonally adjusted annualized rate of 4.74 million, led by a surge of sales in the West, the National Association of Realtors reported Monday. 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.” Total housing inventory at the end of December fell 11.7 percent to 3.68 million existing homes available for sale, NAR said, which represents a 9.3-month supply at the current sales pace, down from a 11.2-month supply in November. About 45 percent of December’s transactions were distress sales — either a short sale or a home in foreclosure — made at discounted prices. Single-family home sales rose 7 percent to a seasonally adjusted annual rate of 4.26 million in December, while condo sales increased 2.1 percent to 480,000. For all of 2008, single-family sales fell nearly 12 percent to 4.35 million, while condo sales dropped 21 percent to 563,000. For 2008 as a whole, sales fell 13.1 percent to 4.91 million, NAR said. November and December were the weakest sales months of the year on a seasonally adjusted basis. When broken down by region, NAR found that existing-home sales in the Northeast slipped a mere 1.4 percent in December, while sales in the Midwest and South increased. Existing-home sales in the West lead the way, jumping 13.6 percent to an annual rate of 1.25 million, a whopping 31.6 percent higher than a year ago. The median home price in the West was $213,100, down 31.5 percent from December 2007. Write to Kelly Curran at [email protected]. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.