December home sales plummet but 2009 finishes stronger than 2008

Dennis Norman

Dennis Norman

NAR’s “seasonally-adjusted” numbers show sales down 16.7 percent for the month…2009 finishes with 5,156,000 homes sold…My projection for the year was 5,143,000 homes….missed it by 13,000 (2/10 of 1 percent) hmm..not bad for a “non-economist” :)

According to the latest report from the National Association of REALTORS(R), existing home sales in December decreased 16.7 percent to a seasonally adjusted-annual rate of 5.45 million units in December from a revised level of 6.54 million units in November, and are 14.9 percent higher than the 4.74 million-unit pace in December 2008.

NAR’s Chief Economist, Lawrence Yun, said “It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit.” I agree with his comment and think this month’s data shows my analogy last month of comparing the increase in homes sales to a kid’s sugar rush was proven right by the sales numbers released today.

I don’t like “seasonally adjusted rates of sales”:

If you have been reading my posts for a while you know by now I don’t like “seasonally adjusted” numbers, particularly when artificial stimuli, such as homebuyer tax-credits, can cause an unseasonal spike in sales activity. I much prefer to see the actual numbers and try to garner from them what is going on in the housing market.

When looking at the ACTUAL Existing Home sales reported by NAR I found that home sales actually declined 12.1 percent from November’s sales of 471,000 units to 414,000 units in December. Comparing sales for December 2009 to the year before there was an increase of 14.7 percent.

We ended 2009 with 5,156,000 homes sold compared with 4,913,000 for 2008 reflecting an increase of 4.9 percent. In 2007 there were 5,652,000 homes sold putting 2009 9.6 percent behind 2007 in number of homes sold.

Other highlights of the NAR Report:

  • Median price of homes sold in December in the US was $178,300, an increase of 4.9 percent from November’s revised median price of $170,000 and an increase of 1.5 percent from December 2008 when the price was $178,700.
  • For all of 2009 the median price of homes sold was $173,500 down 12.4 percent from 2008’s median price of $198,100.
  • Distressed sales accounted for 32 percent of all home sales in December and for 36 percent of all home sales for 2009.
  • Total housing inventory at the end of December was 3,289,000 homes for a 7.2 month supply, an increase of 10.8 percent from last months 6.5 month supply.

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