Housing Sales Increase; Prices Tumble

[MichaelC 160]

Falling Prices Push Sales Numbers Higher

 

Falling prices push existing-home sales up 6.5%

For full year, sales fall 13% while prices drop a record 9.3%

 

By Rex Nutting, MarketWatch

Last update: 11:54 a.m. EST Jan. 26, 2009WASHINGTON (MarketWatch) -- Bargain hunters snapped up more foreclosed homes in December, lured by the biggest price decline seen in more than 70 years, the National Association of Realtors reported Monday.

Sales of existing homes rose 6.5% in December to a seasonally adjusted annualized rate of 4.74 million, led by a big rebound in the West where prices have fallen more than 30%, the industry trade group said. Sales in December were down 3.5% from the previous December.

About 45% of the transactions in December were considered distress sales, either a short sale or a home in foreclosure, the Realtors said. Many foreclosure sales are handled outside the Realtors' system and are not reported by the Realtors.

"Rising foreclosures and the large inventory overhang continue to exert downward pressure on prices," wrote Anna Piretti, an economist for BNP Paribas.

For 2008 as a whole, sales fell 13.1% to 4.91 million, the industry trade group said. November and December were the weakest sales months of the year on a seasonally adjusted basis as credit dried up.

The median sales price fell to $175,400 in December, down a record 15.3% compared with a year earlier. For all of 2008, median prices dropped 9.3% to $198,600, the lowest level since 2004.

The price decline is likely the largest since the Great Depression in the 1930s, according to Lawrence Yun, chief economist for the trade group.

Inventories of unsold homes dropped 11.7% to 3.68 million, representing a 9.3-month supply at the December sales pace, compared with 11.2 months in November. Inventories typically decline about 8% to 10% in December, Yun noted. The inventory data are not seasonally adjusted. Homes in foreclosure that are not listed with Realtors are not counted in their inventory figures.

"While supply and demand remain unbalanced, the increase in sales and the reduction in inventories observed in December are important steps in the right direction," Piretti said.

Sales in December were stronger than the 4.36 million expected by economists surveyed by MarketWatch. The pending home sales index had fallen 4% in the month, signaling fewer contracts signed. November's sales pace was revised lower to 4.45 million from 4.49 million initially reported.

The sharp decline in mortgage rates in recent months probably didn't have much impact on sales that closed in December, Yun said. Home sales typically close two months or so after a contract is signed.

Sales of single family homes rose 7% to 4.26 million, while condo sales rose 2.1% to 480,000. For all of 2008, single-family sales fell 12% to 4.35 million, while condo sales fell 21% to 563,000.

The report comes as signs of a deepening recession mount. Reflecting the weak housing market, Home Depot announced Monday it would eliminate 7,000 jobs and close its Expo home decorating division.

The government will report on sales of new homes on Thursday. Economists surveyed by MarketWatch expect sales to decline about 4% to a seasonally adjusted annual rate of 390,000 in December. See Economic Calendar.

In a separate report, the Conference Board said the index of leading economic indicators rose 0.3% due to a large increase in the money supply. The private group said an intense recession will continue through the spring.

 

Rex Nutting is Washington bureau chief of MarketWatch.

[James-Ct 0]

I heard that 50k layoffs were announced today. We'll see if the Dec house sales trend holds up thru Jan/Feb/Mar. I doubt it will.

[MichaelC 160]

I was watching the news today and saw that. That's a lot of folks on the unemployment lines. Like you, I think that sales uptick is an aberration, and not the start of any great economic recovery, despite the Anointed One now in the White House.

[<Steve> 82]

About 45% of the transactions in December were considered distress sales, either a short sale or a home in foreclosure, the Realtors said. Many foreclosure sales are handled outside the Realtors' system and are not reported by the Realtors.

MC I find this intersting. Seems entrepreneurs and small business is what makes a differance and not monopolies and regulation.

I think that sales uptick is an aberration, and not the start of any great economic recovery, despite the Anointed One now in the White House.

The Anointed One unfortunately doesn't realize that the true economy is the small business and entrepreneur. Not entitlements and government prop-ups.