It may not signify a sustained turnaround for the housing market, but existing home sales continued an uptrend in December and total inventory at the end of 2011 dropped 9.2 percent to 2.38 million – its lowest level since March 2005.
The latest monthly report shows total existing-home sales rose 5 percent to a seasonally adjusted annual rate of 4.61 million in December, from a downwardly revised 4.39 million in November, according to the National Association of Realtors.
It marked the third consecutive monthly gain.
Sales are 3.6 percent higher than the 4.45 million-unit level in December 2010. The figures are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops.
Lawrence Yun, NAR chief economist, said the trend represents early signs of what may be a sustained recovery. The steady rise also means more borrowers are able to take advantage of record-setting low mortgage rates. This week, Freddie Mac said the 30-year fixed rate mortgage set a new low at 3.88 percent.
“The pattern of home sales in recent months demonstrates a market in recovery,” he said. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”
For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.
Total housing inventory drop at the end of December represents a 6.2-month supply at the current sales pace, down from a 7.2-month supply in November.
Available inventory has trended down since setting a record of 4.04 million in July 2007, and is at the lowest level since March 2005 when there were 2.30 million homes on the market.
“The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future,” Yun said.
However, the foreclosure crisis still represents an anchor holding down a full and sustained recovery.
The NAR said foreclosures sold for an average discount of 22 percent in December, up from 20 percent a year ago, while short sales closed 13 percent below market value compared with a 16 percent discount in December 2010.
A total of 2,698,967 foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 1,887,777 U.S. properties in 2011, a decrease of 34 percent in total properties from 2010, according to RealtyTrac’s annual report.
But the decline was mostly the result of a growing backlog of foreclosure actions that were delayed as servicers reviewed questionable paperwork – fallout from the “robo-signing” scandal. U.S. and state authorities are close to finalizing a settlement with major lenders to compensate homeowners affected by allegedly fraudulent foreclosures.
NAR President Moe Veissi, broker-owner of Veissi & Associates in Miami, said more buyers are expected to take advantage of low interest rates and reasonable-to-low prices this year.
“We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”
