Existing homes sales rose 12.3% in December to 5.28 million
Existing homes sales shot up 12.3% in December, coming in well above most analysts' estimates and marking growth in five of the final six months of 2010. The National Association of Realtors said seasonally adjusted sales rose to an annualized rate of 5.28 million last month from 4.7 million for November, which was upwardly revised a few thousand. The monthly rate is down 2.9% from the 5.44 million units in December 2009. Economists polled by Econoday were expecting the December annualized rate to climb to 4.9 million with a range of estimates from 4.55 million and 5.04 million. A Briefing.com survey projected a rate of 4.85 million units for last month. "December was a good finish to 2010, when sales fluctuate more than normal," NAR Chief Economist Lawrence Yun said. "The pattern over the past six months is clearly showing a recovery. The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain." NAR said the median existing-home price in December was $168,000, down 1% from a year earlier, and hurt the number of distressed sales that are normally discounted 10% to 15%, according to Yun. The level of distressed-home sales last month rose to 36% of the existing-home market, up from 33% in November and 32% a year earlier. NAR said all-cash sales have remained consistently high for the past six months at nearly 30% of the market. In December, all-cash transactions accounted for 29% of all sales down from 31% in November yet higher than 22% a year earlier. The giant real estate industry group, which measures the completed transactions of single-family, townhomes, condos and co-ops, now puts the inventory of existing homes at 3.56 million, which is an 8.1-month supply and down 4.2% from November when inventory represented a 9.5-month supply. Mortgage interest rates rose steadily the last few weeks of 2010 and the average rate for a 30-year, fixed-rate mortgage was 4.71% in December up from 4.3% a month earlier. Rates reached the lowest level in generations in early November at 4.07%, according to Zillow. In late December, Freddie Mac said the average rate for a traditional 30-year mortgage in 2010 was the lowest since 1955 at 4.7%. "Historically low mortgage interest rates, stable home prices, and pent-up demand are drawing home buyers into the market," said NAR President Ron Phipps. "Recent home buyers have been successful with very low default rates, given the outstanding performance for loans originated in 2009 and 2010." Sales of single-family homes rose 12% in December from the prior month but were 2.5% lower than a year earlier. Existing condo and co-op sales increase 16.4% from November yet remain 5.2% below the 2009 pace, according to NAR. "The decent increase in existing home sales in December takes them marginally above the levels seen before sales were boosted and subsequently depressed by the homebuyer tax credit," according to analysts at Capital Economics. "But high unemployment, tight credit conditions and fears of more price declines mean that further upward progress will be gradual." Write to Jason Philyaw.