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Sales of existing homes plunged 17% in December, the sharpest drop since records began in 1968. The sales pace fell to 5.45 million annual rate from 6.54 pace the previous month.
Part of the reason for the drop was attributed to the termination of the first $8,000 tax credit for first time buyers. That kept buyers away from the market. Since then Congress has extended the tax credit. Realtors expect a pick up in sales going into the Spring season.
For the year, existing home sales rose 4.9% to 5.16 million, the first gain in four years.
Inventories of previously owned unsold homes fell 6.5% to 3.28 million, the lowest level since March 2008. This too, is good news. At the current pace it would take 7.2 months to sell all the homes.
First time home buyers helped push up the median home price to $178,300 in December, up 1.5% from the previous year.
The Commerce Department reported that New Home sales, calculated when contracts are signed, fell 11% in November, a seven month low.
The housing sector is difficult to sort out, mainly because of foreclosures and high unemployment. Any uptick in hiring would restore confidence to the consumer and most likely would filter down to the home buyer. Then too as the inventory of unsold homes declines, it could trigger a buying wave to get the best deals before prices turn upward.
Do you see an uptick in the housing sector this year?
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Reader Comments (Page 1 of 1)
1-25-2010 @ 5:22PM
william lindblad said...
Static, and don't believe everything that is seen in statistics as what is being reported is likely misleading. I am sure that the sales figure being reported "down" is correct, however one must remember that this is a "lump sum" percentage.
Since there has been no such thing as a "jumbo mortgage" for over a year you can make a good bet that the market in excess of 400K is stagnant. Since this segment still comprises more than 25% of the "for sale" roster, it would take major sales in the remaining to make for an offset. I am willing to be that if this report were broken down into dollar sectors the one at 125K and less would probably be in the + column. That is what this is all about. The changes in mortgage scrutiny and government subsidies are simply reflecting a conservative banking policy regarding home loans. In other words - loans are being made respective toward repayment -not on the speculative nonsense that created this mess.
Housing in general is going to remain static. The next hurdle is going to be what to do with the mass of homes that were grossly overpriced. It will be a perplexing problem as trying to de-value these notes will only push the entire market down. If someone buys now at 125K with little down they too could be in a negative mortgage scenario. Precarious problem, and at some point in the near future both government and the financial institutions are going to have to confront it. I hope they attack sooner rather than later as there remains the commercial sector - a rash of failures at an inappropriate time will set all progress back on it's tail.
1-26-2010 @ 4:29AM
bob said...
This housing problem is so severe that until it stabilizes the economy will never recover. New construction is almost shut down. This affects the sale of durable goods. No appliances are being sold, lumber yards are closing, the building sub contractors are unemployed, etc.
The number of existing homes that are "under water" is the other elephant in the room.
The mortgage modification looks as if it can help the homeowner at risk. But this program has a down side. If approved the payments made during the three month trial period will be reported to the credit bureaus as being in default. This means your credit score will go down. It makes no sense. If a homeowner needs assistance with their payments then why "kick sand in his face" as part of the assistance package.
It has been suggested that the loss of equity in the homes could be resolved by lowering the principle of these mortgages to current market values. This will probably never happen because the banks are too greedy. But the banks will have to take back a foreclosed house that will cost them much more in the long run.
Why did this happen? Eight years of mis management by the Bush administration has created this mess.
Does anyone have a solution? Post your ideas.
1-26-2010 @ 6:06AM
GUK said...
Bush didn't start this; you fool. Read the book by Thomas Sowell and open your eyes. The point is: We are ALL in this mess together regardless of who blames who. The ONLY solution is MEANINGFUL employment, and that does not seem to be on the horizon.
1-27-2010 @ 12:40PM
RT said...
@ Bob:
It's certainly not a scientific solution, but there's one that the economist for the National Association of Realtors is pushing (http://www.newsy.com/videos/existing-home-sales-drop-drastically-in-december): Jobs. Jobs. Jobs.