“Existing-home sales rose unexpectedly while inventory declined, led by a surge of sales in the West,” according to the National Association of Realtors®.
The NAR went on to state that existing-home sales jumped 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December from a downwardly revised pace of 4.45 million units in November.
“It appears some buyers are taking advantage of much lower home prices,” Lawrence Yun, NAR chief economist, said. “The higher monthly sales gain and falling inventory are steps in the right direction, but the market is still far from normal balanced conditions. Buyers will continue to have an edge over sellers for the foreseeable future.”
Mr. Yun went on to point out that total housing inventory at the end of December fell 11.7 percent to 3.68 million existing homes available for sale, which represents a 9.3-month supply at the current sales pace, down from a 11.2-month supply in November. A “balanced market” between buyers and sellers is normally reflected into a 4-6 month inventory level.
Yun said, “We’ve added 25 million people to our population over the past decade and housing affordability conditions are the best we’ve seen since 1973, but household formation is much lower than expected. Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable home buyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help to stabilize home prices and set the foundation for a sustainable economic recovery.”
NAR President Charles McMillan said, “The typical buyer plans to stay in their home for 10 years, which is the correct approach in today’s market. With historically low mortgage interest rates, flexible sellers, a large inventory, and homes that are selling for less than replacement construction costs in much of the country, buyers who’ve been on the fence should take a closer look at today’s market.”
McMillan noted that first-time buyers may consider FHA loans, which offer downpayments of 3.5 percent on a 30-year fixed-rate mortgage.
According to the study, in the South, existing-home sales rose 7.4 percent in December, but are 11.2 percent lower than December 2007. Median prices in the South were $158,600, or down 8.0 percent from 2007.
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