Existing home sales rise 5% in December
Sales of existing homes rose for the third straight month, increasing 5% in December, according to the National Association of Realtors. The trade group said the sale of single-family homes, townhomes, condos and co-ops increased to a seasonally adjusted rate of 4.61 million in December from a downwardly revised 4.39 million in November. For all of 2011, existing-home sales rose 1.7% to 4.26 million from 4.19 million in 2010. Lawrence Yun, NAR chief economist, said these are early signs of what may be a sustained recovery. "The pattern of home sales in recent months demonstrates a market in recovery," he said. "Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market." The national median existing-home price for all housing types fell 2.5% to $164,500 in December from the same month a year earlier. Distressed homes accounted for 32% of sales in December (19% were foreclosures and 13% were short sales), down from 36% in December 2010, but up from 29% in November. Potential homeowners also have access to the lowest mortgage interest rates in 40 years. The national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96% in December from 3.99% in November, according to Freddie Mac. The rate was 4.71% in December 2010. Total housing inventory in December dropped 9.2% to 2.38 million existing homes available for sale, representing a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November. Available inventory trended down since setting a record of 4.04 million in July 2007 and is at the lowest level since March 2005 when 2.30 million homes sat on the market. NAR President Moe Veissi said more buyers are expected to take advantage of market conditions this year. "We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.” Write to Justin T. Hilley. Follow him on Twitter @JustinHilley.