(Update 1; added NAR data duration and conference call) Let’s start with the real news in today’s NAR existing-home sales report: the median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. The drop represents the first time in at least 40 years that median national home prices have fallen on an annual basis. The NAR only maintains record back to 1968, and chief economist Lawrence Yun said on a conference call this morning that the drop likely represents the first annual drop in median housing prices since the Great Depression. From the press statement:

Existing-home sales slipped 2.2 percent to a seasonally-adjusted annual rate of 4.89 million units in December from a pace of 5.00 million in November, and are 22.0 percent below the 6.27 million-unit level recorded in December 2006. Total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in November. “The fall in inventory in December is encouraging, but inventories remain elevated and buyers have a clear edge over sellers in many markets,” Yun said.

Yun’s neglecting some important points, per the Calculated Risk blog. For one thing, the reported December inventory is the highest level ever recorded for the month. For another, that months of supply number is the highest year-end reading since 1982. The NAR joined California governator Arnold Schwarzenegger in calling for the conforming limit to be raised to $625,000. NAR president Richard Gaylord — seriously, that’s his name — said “it is grossly unfair that some Americans do not have access to low-interest rate loans.” The NAR said that higher conforming loan limits, if enacted, would serve to increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000, and increase economic activity by $44 billion.