Existing home sales in plunged a little deeper than expected in December though prices surprisingly firmed in the month. Sales fell 16.7 percent for the largest monthly decline in data going back to 1968. The annual rate of 5.45 million units compares with expectations for 5.90 million and against the 2009 total of 5.16 million. Declines swept all regions especially the Midwest and were split evenly between single-family homes, down 16.8 percent to a 4.79 million rate, and condos, down 15.4 percent to 0.66 million.
Now the goods news. Prices firmed, up a sizable 4.9 percent on the median to $178,300 and up 6.4 percent on the average to $225,400. The National Association of Realtors, which compiles the report, attributed the gain to a higher proportion of repeat buyers during the month. First-time buyers, enticed by special credits, were a key force behind the housing sector's pop higher in the second half of last year. The first round of housing credits expired in November before being extended and expanded into the spring, a factor that is likely to lead to acceleration in home buying in the coming months.
But right now the housing sector is once again very soft. A special negative in today's report is a rise in supply, to 7.2 months at the current sales rate vs. 6.5 months in November. Reaction to today's report was muted with stocks and the dollar slipping very slightly. New home sales will be posted on Wednesday and are expected to firm following an 11 percent tumble in November.
Market Consensus before announcement
Existing home sales jumped 7.4 percent in November on top of October's record 9.9 percent surge. The annual sales rate of 6.54 million was up 44 percent on a year-ago basis. Strong sales have drained supply down to 6.5 months - the lowest rate in 3-1/2 years. Prices may be leveling as the median price rose 0.2 percent in November to $172,600, ending a long run of monthly declines. However, the price numbers are affected by shifts in the composition of homes sold-such as the share in the high end versus the share in the low end. Looking ahead, there is a lot of uncertainty about the impact of off and on again tax credits for homebuyers. But a negative is the 16.0 percent monthly drop in pending home sales for November. Pending home sales typically show up in existing home sales one or two months later.