WASHINGTON — Existing home sales surged past economist estimates in December, jumping a record 12.3% to a seasonally adjusted annual rate of 5.28 million, the National Association of Realtors reported Thursday.
Economists expected a rate of 4.87 million home sales for the month. Home sales in November were revised higher to an annual rate of 4.70 million from an initially reported 4.68 million.
The 12.3% surge in December is the largest percentage gain in a single month for the index, which dates back to 1999. December is typically a time of weak home sales due to poor weather conditions, making dramatic changes like this less meaningful. That seasonal drop-off is not reflected in the seasonally adjusted numbers above.
A total of 404,000 homes were actually sold in December on an unadjusted basis. That compares with average monthly sales of 475,000 since January of 2005.
Distressed homes claimed 36% of the market in December, compared with 33% in November.
Total housing inventory at the end of December fell 4.2% to 3.56 million existing homes available for resale. That represents 8.1 months of supply at the current sales pace — a considerable decline from November’s 9.5-months of supply.
“Significantly, the inventory of unsold homes fell, which could provide support for prices down the road,” said Diane Swonk, chief economist at Mesirow Financial. “I wouldn’t count too much on that trend in the first half of 2011, however, because many sellers have been holding off on listing their homes until some of the foreclosures are sold. Inventories will rise again, once they decide to list.”
The increase in mortgage rates in December “provided some urgency” for some perspective buyers to close on a home, said Lawrence Yun, NAR’s chief economist. He said typically an initial jump in mortgage rates “rush” buyers into the market. But a sustained climb in interest rates can be a negative for the housing market, he said.
Yun said the December sales figure represents a “good finish to this volatile year of 2010.” The initial annual estimate for sales in 2010 is 4.908 million, the lowest annual sales since 1997. The figure is down 4.8% from 2009. The median price for 2010 is $173,000.
Yun said he expects 5.2 million existing home sales in 2011, equal to the annual rate of sales in 2000.
The median home price declined to $168,800 in December, the lowest median price in 10 months.
The supply of existing homes for sale dropped to 8.1 months, the lowest level since March 2010. The figure has declined for five straight months.
