The National Association of Realtors said Tuesday that existing home sales demurred in December, but held levels well above the year prior month and that fleeting inventories helped drive the price of houses higher again.
Existing home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 1.0 percent to a seasonally adjusted annual rate of 4.94 million in December from a downwardly revised 4.99 million in November. Although lower month-over-month, the December level was still 12.8 percent above the 4.38 million-unit level in December 2011.
The reading came up shy of economist predictions for sales to tally 5.1 million units with the December input. Even still, December was the second highest rate of sales since November 2009, a period just prior to a federal tax credit was about to expire for home buyers.
The agency estimates that 4.65 million pre-owned homes were sold in total for 2012, a 9.2 percent increase over the 4.26 level in 2011, marking the highest volume since 2007 when it reached 5.03 million and the strongest increase since 2004.
Lawrence Yun, chief economist at the National Association of Realtors, explained that “pent-up demand” is sustaining the market with an assist being given to record low mortgage interest rates, while a shrunken inventory and tight lending policies by banks are providing restrictive forces.
Inventory in December was down 21.6 percent compared to the year prior month to 1.82 million homes, representing the lowest level since 2001.
The national median price for existing homes of all types in December was $180,800, an 11.5 percent increase over December 2011. It was the tenth consecutive month of year-over-year increases in prices and the largest jump since November 2005.
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 largest yearly increase since 2005.
“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,” said NAR President Gary Thomas.
Single-family home sales faded 1.4 percent this December compared to a year before, while condominium and co-op sales rose 1.7 percent.
In December 2012 compared to December 2011, sales in the Northeast and West U.S. rose 3.2 percent and 5.1 percent, respectively. Sales in the Midwest dropped 5.9 percent while sales in the South declined 3.0 percent.
Stocks on Wall Street are flat in Tuesday morning trading. The Dow Jones Industrial Average is off by just 3 points, the S&P 500 down by 2 points and the Nasdaq is 10 points lower.