Existing Home Sales dip Further into One-Year Lows

December existing home sales edged up 1.0 percent to a seasonally adjusted annual rate of 4.87 million from 4.82 million in November and were 0.6 percent below the 4.90 million unit pace in December 2012 according to The National Association of Realtors® (NAR).   The November number is a substantial revision from the original estimate of 4.90 million.  Last month's numbers--the worst in a year--already represented a 4.2 percent drop from October. and broke a 29 month streak in which sales outpaced those of the same month the year before.  

Despite the fact that the month-over-month numbers can technically be labeled an improvement, December is now the second consecutive month showing deterioration in the year-over-year figures. 

NAR is focusing on the positive, saying that existing home sales for 2013 were the strongest in seven years and median prices maintained strong growth through the year.  NAR reports that for all of 2013, there were 5.09 million existing home sales, which is 9.1 percent higher than 2012. It was the strongest performance since 2006, the last year of the housing boom, when sales reached 6.48 million.

For the entirety of 2013 the national median existing-home price was $197,100, which is 11.5 percent above the 2012 median of $176,800, and was the strongest gain since 2005 when it rose 12.4 percent. 

Lawrence Yun, NAR chief economist, said housing has experienced a healthy recovery over the past two years. "Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates and a large pent-up demand driving the market," he said. "We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population."

In addition to summary information on sales for the past year, today's NAR release contained its regular monthly statistics on existing home sales.  In  including sales of single-family houses, condominiums, townhouses, and cooperative apartments,

Single-family home sales in December rose 1.9 percent to a seasonally adjusted annual rate of 4.30 million from 4.22 million in November, but are 0.7 percent below the 4.33 million-unit pace in December 2012.  Existing condominium and co-op sales fell 5.0 percent to an annual rate of 570,000 units in December from 600,000 units in November, and are unchanged from a year ago.

The median existing-home price for all housing types in December was $198,000, up 9.9 percent from December 2012.  Single-family homes had a median price of $197,900, up 9.8 percent from a year ago and the condo price was $198,600, 10.9 percent above December 2012.

Foreclosures accounted for 10 percent of December sales and short sales for 4 percent, unchanged from aggregate distressed sales of 14 percent in November but a drop of 10 percentage points from December 2012.  Foreclosures sold for an average discount of 18 percent below market value in December, while short sales were discounted 13 percent.  NAR said the shrinking share of distressed sales accounts for some of the overall price growth.

Total housing inventory at the end of December fell 9.3 percent to 1.86 million existing homes available for sale, which represents a 4.6-month supply at the current sales pace, down from 5.1 months in November. Unsold inventory is 1.6 percent above a year ago, when there was a 4.5-month supply.  Homes took a median of 72 days to sell in December compared to 56 days in November but about the same as in December 2012.   Twenty-eight percent of homes sold in December were on the market for less than a month, down from 35 percent in November, which NAR said appears to be a result of the weather.

NAR President Steve Brown said that with jobs expected to improve this year, sales should hold even despite rising home prices and higher mortgage interest rates. "The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory," he said. "With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home."

First-time buyers accounted for 27 percent of purchases in December, down from 28 percent in November and 30 percent in December 2012.  Investors purchased 21 percent of homes, down two points from November but the same percentage as a year earlier, and accounted for many of the 32 percent of December transactions which were all cash sales.

Regionally, existing-home sales in the Northeast slipped 1.5 percent to an annual rate of 640,000 in December, but are 3.2 percent higher than December 2012. The median price in the Northeast was $239,300, up 3.6 percent from a year ago.

Existing-home sales in the Midwest fell 4.3 percent in December to a pace of 1.11 million, and are 0.9 percent below a year ago. The median price in the Midwest was $150,700, which is 7.0 percent higher than December 2012.

In the South, existing-home sales increased 3.0 percent to an annual level of 2.03 million in December, and are 4.6 percent above December 2012. The median price in the South was $173,200, up 8.9 percent from a year ago.

Existing-home sales in the West rose 4.8 percent to a pace of 1.09 million in December, but are 10.7 percent below a year ago. Inventory is tightest in the West, which is holding down sales in many markets, and multiple bidding is causing it to experience the strongest price gains in the U.S. The median price in the West was $285,000, up 16.0 percent from December 2012.