Existing Home Sales Surge in December

Existing homes sales surged in December, continuing their upward trend with the fourth rise in the past five months.  The National Association of Realtors (NAR) reported a 12.3% increase to 5.28 million (seasonally adjusted annual rate) in December, building on the 6.1% increase in November. Overall, from the low of 3.84 million units in July, existing home sales have gained 37.5% in the five months to December. 

Both single-family home sales and condominium and coop sales contributed to the sharp rise in December, with single-family home sales up 11.8% to 4.64 million units and condominium and coop sales rising 16.4% to 640,000 units. The strong sales growth in December was consistent across all regions, with sales in the West increasing 16.7% to 1.33 million, the Northeast up 13% to 870,000, the Midwest rising 11% to 1.11 million units and the South up 10.1% to 1.97 million units.

Despite the strong growth in home sales over the past five months, the inventory of for-sale homes remains high, with 3.56 million units available.  At the current sales level, this represents 8.1 months’ supply.  While this is a significant improvement on November’s 9.5 months’ supply, it is still well above traditional levels of 4 to 5 months’ supply or a little over 2 million units observed between 1999 and 2005.

The parallel NAR practitioner survey indicated that of the existing home sales in December, 33% were to first time buyers, 20% were to investors and the remaining 47% were to repeat buyers. Distressed home sales continue to be a major portion of sales, with 36% of December sales involving a distressed seller. This is up from 33% in November and the 32% share in December 2009.

The NAR identify that “The December pace is near the volume we’re [the NAR] expecting for 2011, so the market is getting much closer to an adequate, sustainable level.” The NAHB agree with this assessment, with December single-family home sales, in line with the level we are forecasting for 2011.

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