Existing Home Sales Jumped in December, Pushing Inventory to 7-Year Low

Sales of previously-owned homes rose for the third consecutive month in December, reaching an 11-month high as the supply of properties on the market dropped to a near 7-year low.

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The National Association of Realtors reported today that existing home sales increased 5 percent month over month in December to an annual rate of 4.61 million units. The gain helped push down the inventory of homes for sale last month to the lowest level since 2005.

The number of previously-owned homes on the market declined 9.2 percent to 2.38 million in December. At the current sales pace, it would take 6.2 months to sell all of those homes, down from 7.2 months at the end of November. A supply ranging from seven to eight months is consistent with stable home prices, according to the NAR.

The median price of existing homes fell 2.5 percent last month to $164,500, compared to $168,800 in December 2010.

December existing home sales were up 3.6 percent from a a year ago, while total sales for 2011 were up 1.7 percent from the previous year with 4.26 million homes sold. A total of 7.1 million¬†homes were sold at the peak of …

the housing boom in 2005.

Sales of existing single-family homes rose 4.6 percent to an annual rate of 4.11 million, while purchases of multi-family properties, including condominiums and townhouses, climbed 8.7 percent to a 500,000 pace.

Purchases rose in all four regions measured by the NAR, led by a 10.7 percent gain in the Northeast and an 8.3 percent increase in the Midwest.

Historically low mortgage rates and a pick-up in the employment rate late in the year gave Americans the confidence to purchase homes that have fallen in value over the last few years, the casualties of a foreclosure glut that still threatens to inhibit a faster recovery in real estate.

Distressed sales, comprised of foreclosures and short sales in which the lender agrees to a transaction for less than the balance of the outstanding mortgage, accounted for 32 percent of all existing-home purchases in December, up from 29 percent in November.

Banks may seize over 1 million U.S. homes in 2012 after legal scrutiny of their foreclosure practices slowed actions against delinquent properties in 2011, according to RealtyTrac Inc.

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