St. Louis housing market finishes 2010 on an upward trend

Dennis NormanToday’s existing home sales report from the National Association of REALTORS(R) shows St. Louis area existing home sales for December were 3.1 percent higher than a year ago and  St. Louis area home prices in December were 7.8 percent higher than the year before.

Nationally, existing home sales in December were at at a seasonally adjusted-annual rate of 5.28 million units which is an increase of 12.3 percent from November and is a decline of 2.9 percent from a year ago. Preliminary numbers for 2010 show 4,908,000 existing homes sold which is a decrease of 4.8 percent from 2009 when there were 5,156,000 existing homes sold, and is just slightly lower than 2008 when there were 4,913,000 homes sold.

Home Prices in the U.S. decrease in December marking six-consecutive months of price decreases-

The median home price in the U.S. in December was $168,800, a slight decrease from November’s revised median price of $170,200 and a decrease of 1.0 percent from a year ago when the median price was $170,500.  Here in St. Louis, the median home price in St. Louis for December was $124,900, down slightly from November’s price of $126,100.

Inventory levels decrease for the fourth-consecutive month- still higher than a year ago

The number of existing homes on the market decreased in December by 4.2 percent to 3.56 million homes, but is up 8.4 percent from a year ago when there were 3.283 million homes for sale. Based upon the current rate of sales the supply that this inventory translates into dropped by 14.7 percent to 8.1 months from 9.5 months in November, but is still 12.5 percent higher than a year ago when the supply was only 7.2 months.

St. Louis has third-highest year-over-year home price increases of the 20 top metros in U.S. –

NAR publishes existing home sales for major metropolitan areas of the U.S. Highlights from that report for December include:

  • Five metro areas saw an increase in sales from a year ago (last month there were none with increases) with Phoenix leading the way with a 10.1 percent increase in sales.
    • Baltimore, MD had the second largest year-over-year sales increase at 5.7 percent, closely followed by Miami-Ft Lauderdale at 5.6 percent and Boston at 5.0 percent.
  • Atlanta, GA had the largest decrease in sales from a year ago with a 15.3 percent decrease.
    • New York-Northern, New Jersey-Long Island had the second highest decrease in sales from a year ago with a 11.4 percent decrease, closely followed by New Orleans with a 11.0 percent decrease.
  • The metros were split on home prices: 9 saw year-over-year price increases and 9 saw year-over-year declines with San Diego holding steady at a 0.00 percent increase.
    • Cincinnati, OH saw the largest one-year increase in home prices this month with a 12.3 percent increase, followed by Indianapolis, IN at 10.2 percent and St. Louis came in third with an increase of 7.8 percent.
    • Miami-Ft Lauderdale, FL saw the biggest one-year decrease in home prices with a decline of 11.7 percent, closely followed by Phoenix, AZ with an 11.4 percent decline and Atlanta, GA with a 10.3 percent decline.

Lawrence Yun, NAR chief economist, said “sales are on an uptrend” and “December was a good finish to 2010, when sales fluctuate more than normal. The pattern over the past six months is clearly showing a recovery,” he said. “The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level. The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”

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 when artificial stimuli, such as 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.

The following are the ACTUAL Existing Home sales reported by NAR without any adjustment or fluff:

  • There were 404,000 existing homes sold in December which is an increase of 13.8 percent from November and a 2.2 percent decrease from a year ago.
  • Below are highlights from each region:
    • Northeast – 63,000 homes sold in December, an increase of 14.5 percent from November and a decrease of 4.5 percent from the year before.
    • Midwest – 84,000 homes sold in December, an increase of 18.3 percent from November and a decrease of 2.3 percent from the year before.
    • South – 156,000 homes sold in December, an increase of 13.9 percent from November and a decrease of 2.5 percent from the year before.
    • West – 101,000 homes sold in December, an increase of 9.8 percent from November and the same as the year before.

Other highlights of the NAR Report:

  • Distressed sales accounted for 36 percent of all home sales in December, up from 33 percent the month before.
  • First-Time homebuyers accounted for 33 percent of the home sales in December, a slight increase from 32 percent the month before.
  • Investors were the buyers of 20 percent of the homes in December, up slightly from 19 percent the month before.
  • Repeat home buyers were responsible for approximately 47 percent of December’s sales, down from 49 percent the month before.

My Take On the Numbers:

For the past couple of months I’ve been saying I thought the market had found the “bottom” and that we are moving toward a sluggish recovery, with price degradation continuing. I think December’s report on existing home sales confirms what I have seen….I think we are moving toward a recovery, albeit a long slow one, and I do think prices will lag behind a little in the recovery process.

As I’ve said before though, my concern is mortgage delinquencies and foreclosures and their impact on the market. I think the high volume of foreclosures, which I expect to see to continue to rise, or at least maintain near record levels for a while, will continue to put pressure on home prices for a while to come.

At least things seem to be going the right direction for now! :)


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