Sales of previously owned homes surged 12.3 percent in December, according to data released by the National Association of Realtors Thursday.Existing-home sales have increased five of the last six months and have now hit a seven-month high, at a seasonally adjusted annual rate of 5.28 million units. That’s up from a rate of 4.70 million in November, but remains 2.9 percent below the 5.44 million pace in December 2009.
“December was a good finish to 2010, when sales fluctuate more than normal,” said Lawrence Yun, NAR’s chief economist. “The pattern over the past six months is clearly showing a recovery.”
Yun says the December sales pace is near the volume he and his organization are expecting for 2011, “so the market is getting much closer to an adequate, sustainable level,” he said. “The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
NAR says the national median price for existing homes sold in December was $168,800, which is 1.0 percent below December 2009.
Yun explained that a modest rise last month in distressed sales, which typically are discounted 10 to 15 percent relative to traditional homes, dampened the median price. In November, NAR reported the median price to be $170,600.
Distressed homes accounted for 36 percent of the market share in December, up from 33 percent in November.
A parallel NAR survey shows first-time buyers purchased 33 percent of homes in December, while investors accounted for 20 percent of the month’s transactions. All-cash sales were at 29 percent in December.
“All-cash sales have been consistently high at about 30 percent of the market over the past six months,” Yun said.
Total housing inventory at the end of last month fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from a 9.5-month supply in November.
Commenting on the latest existing-home sales numbers, Patrick Newport, U.S. economist for the research firm Newport continued, “At some point, the housing market will start to turn. We believe that it will start to improve this year (but that the recovery will be a long one). December’s unexpectedly strong existing home sales numbers may be an early sign that the recovery may have begun.”