Year over year, sales of existing homes (single-family, townhomes, co-ops, and condominiums) increased 6.5%; equating to a seasonally-adjusted annual rate of nearly 4.75 million homes this past December. This number is up from a previously downward pace of 4.45 million homes reported in November. This year's December figures are 3 1/2% less than the almost five million homes sold in December of '07.
A little less than five million sales of existing homes were sold in 2008. This figure is 13.1% less than the more than 5.6 million sales which were recorded throughout 2007. These figures are the lowest reported since 1997.
The chief economist for the NAR, Lawrence Yun states that the current market is being driven by buyers that are drawn to decreasing home prices and that prices continue to fall at a significant rate. Yun continues to state that increased sales and lowering inventory levels are both good signs; however the overall market is a good distance away from normal, balanced conditions. For the time-being, it will continue to be a buyer's market.
Inventory levels dropped to over 11% to a number of less than four million homes available for purchase. This number equates to a more than nine month supply at current rates of sales. This level of inventory is down from an 11.2 -month supply reported in November.
Taking a much broader perspective, Yun states that the real estate market in general is underperforming and in turn, hurting the broader economy of the nation. The country has added an additional 25 million persons to its population over the past 10 years, with home prices the most affordable since 1973. However, the formulation of new households is happening much less than anticipated. Yun believes that the new administration along with Congress needs to move swiftly to create a stimulus plan which includes a non-repayable home buyer tax credit. Such a credit could jump-start the overall real estate market, and help to pave the way for a sustainable recovery.
The nationwide median price of an existing home stood at $175,400 in the month of December. This figure is 15.3% less than that of December 2007. At that point in time the price was $207,000.
Now continues to be a great time for well-qualified first time buyers to enter the market. Buyers who have been "on the fence" should take another look; with historically-low interest rates, a large inventory to select from and flexible sellers there have been few periods in history that have offered so many advantages at once.
First time buyers may want to look into an FHA loan which offers down payments as low as 3.5% on fixed 30 year mortgages.
Here in the west, sales of existing homes increased 13.6% in December, with the median home price being $213,000.
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