Existing Home Sales Drop in December while Prices Continue Upward
Existing homes sold in December at a seasonally adjusted annual rate of 4.94 million homes according to the National Association of Realtors®. This is a 1.0 percent reduction in sales from November where the revised estimate was 4.99 million, down from an original estimate of 5.04 million. Existing home sales include single-family houses, townhomes, condominiums, and co-operative apartments.
The preliminary estimate for sales during 2012 is 4.65 million, up 9.2 percent from 4.26 million in 2011 and the highest volume since 2007 when existing home sales totaled 5.03 million. It was also the strongest annual increase since 2004.
The national median existing-home price for all housing types was $180,800 in December, 11.5 percent above the December 2011 price of $209,500. This is the strongest increase since November 2005 when the median price jumped 12.9 percent and it is the 10th consecutive month of year-over-year price gains. The last time the market had 10 straight increases was August 2005 to May 2006.
For all of 2012, the preliminary median existing-home price was $176,600, up 6.3 percent from $166,100 in 2011. It was the strongest annual price gain since 2005 when the median price rose 12.4 percent.
Lawrence Yun, NAR chief economist, said pent-up demand is sustaining the market. "Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales. The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013."
Single-family home sales slipped 1.4 percent to a seasonally adjusted annual rate of 4.35 million in December from 4.41 million in November while condominium and co-op sales were up 1.7 percent to 590,000 from 580,000. On an annual basis single family sales were up 11.5 percent from 3.90 million-units in December 2011 while condo and co-op sales in November rose 22.9 percent from 480,000-units.
The preliminary estimate of total single family sales in 2012 is 4.127 million compared to 3.787 million in 2011. Condo and coop sales are expected to total 528,000, up from 477,000 in the prior year.
The median single-family home price was $180,300 in December, up 10.9 percent from a year ago and the median condo price was 16.0 percent higher at $184,100. The respective prices of the two housing types in December 2011 were $209,800 and $206,800.
Housing inventory at the end of December was 1.82 million existing homes available for sale, down 8.5 percent from November. This is a 4.4-month supply at the current sales pace compared to 4.8 months in November, and is the lowest inventory since May of 2005, near the peak of the housing boom, when it was 4.3 months. Listed inventory is 21.6 percent below a year ago when there was a 6.4-month supply and raw unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes on the market.
Foreclosures represented 12 percent of home sales in December and another 12 percent were short sales. This was up from a 22 percent share for all distress sales in November but well below the total of 31 percent one year earlier. Foreclosures sold for an average discount of 17 percent below market value in December, while short sales were discounted 16 percent.
NAR President Gary Thomas said, "Although tight inventory is limiting home sales in many areas, overall sales are expected to stay on an upward trend. The biggest impact of tight inventory is upward pressure on home prices, but after values fell below replacement construction costs, prices are still affordable in most of the country."
First-time buyers accounted for 30 percent of purchases in December, unchanged from November and investors purchased 21 percent, up from 19 percent. All-cash sales were at 29 percent of transactions in December, compared with 30 percent in November and 31 percent in December 2011.
The median time on market for all homes was 73 days in December, up from 70 days in November, but is 26.3 percent below 99 days in December 2011. Short sales were on the market for a median of 117 days, foreclosures typically sold in 45 days, and non-distressed homes took 74 days. Thirty-one percent of all homes sold in December were on the market for less than a month.
Existing-home sales in the Northeast rose 3.2 percent to an annual rate of 640,000 in December and are 10.3 percent above December 2011. The median price in the Northeast was $231,600, up 5.3 percent from a year ago.
In the Midwest sales fell 5.9 percent in December to a pace of 1.12 million but are 15.5 percent higher than a year ago. The median price in the Midwest was $144,800, which is 12.3 percent above December 2011.
Sales in the South were at an annual rate of 1.95 million, down 3.0 percent on a monthly basis but up 14.7 percent from December 2011. The median price in the South was $161,100, up 11.0 percent from a year ago.
Western regional sales were up 5.1 percent to 1.23 million in December and are 8.8 percent higher than a year ago. The median price in the West was $239,900, which is 17.3 percent above December 2011.