Finally some good news for home sellers

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Sales of existing homes rose unexpectedly in December although the pace remained below that of a year ago, according to the National Association of Realtors (NAR). The jump was led by a surge in sales in the West. Sales volume was the lowest seen since 1997 while the national median price for an existing home was $175,400. According to Freddie Mac, the national average commitment rate for 30-year, conventional, fixed-rate mortgage fell 5.29 percent in December. Last week, Freddie Mac reported the 30-year rate was 5.12 percent.

The typical buyer plans to stay in their home for 10 years which is the correct approach in today’s market,” said NAR President Charles McMillian, a broker with Coldwell Banker Residential Brokerage in Dallas-Ft. Worth. “With historically low mortgage 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.”

Sales of all types of existing homes, including single-family homes, townhomes, condominiums and co-ops – rose 6.5 percent to a seasonally adjusted annual rate of 4.74 million units in December. Despite the increase, sales were still 3.5 percent below the 4.91 million-unit pace of December 2007. Overall, the 4,912,000 existing-homes sold in 2008 is still 13.1 percent lower than the 5,652,000 transactions recorded in 2007.

It appears some buyers are taking advantage of much lower home prices,” explained Lawrence Yun, NAR chief economist, saying home prices continue to fall significantly. “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 in the foreseeable future.”

Regionally, the West (up 13.6 percent), South (up 7.4 percent) and Midwest (up 4.0 percent) all experienced increases in existing homes sales. December’s annual rate of 1.25 million in the West was 31.6 higher than a year ago, however the median price in the region was down almost the same percentage to $213,100 over the same period. In the South, sales increased to an annual pace of 1.74 million in December which was off 11.2 percent from December 2007. The median price in the South was $158,600, or 8 percent lower than a year ago. The Midwest’s annual level of 1.04 million was 10.3 percent lower than in 2007 while the median price dropped 11.4 percent to $140,800. Only the Northeast experienced a decline, slipping 1.4 percent to 720,000 in December. That’s 14.3 percent below December 2007. The median price in the Northeast also fell to $235,000, down 7.8 percent from 2007.

Sales of single-family homes rose 7.0 percent to a seasonally adjusted annual rate of 4.26 million in December, up from November’s 3.98 million. The median price of $174,700 for a single-family home in December was down almost 15 percent from the previous year. For all of 2008, single-family home sales fell nearly 12 percent to 4.349 million and the median price fell 9.5 percent to $197,100 from 2007 levels.

Existing condominium and co-op sales also increased by 2.1 to a seasonally adjusted annual rate of 480,000 units in December, a 10,000 unit increase over November. Sales remain 18.4 percent below 2007’s level of 588,000 units. Overall, sales declined 21 percent to 563,000 units with a median price of $210,000 for all 2008.

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,” said Yun. “Consequently, there is a pent-up demand which could be unleashed with the right stimulus, including a non-repayable homebuyer tax credit. The Obama administration and Congress need to move fast to stimulate a spring sales upturn which will help stabilize home prices and set the foundation for a sustainable economic recovery.”