Sales of homes off in December slightly

Jan. 22, 2013, 12:10 p.m. EST

Sales of existing homes tick down in December

Monthly pace disappoints investors; warning on price appreciation

By Ruth Mantell, MarketWatch

Sales of existing homes in 2012 hit the highest level in five years, as prices also gained, according to data released Tuesday by the National Association of Realtors.

WASHINGTON (MarketWatch) — Sales of existing homes ticked down in December, while the total for 2012 hit the highest level in five years, according to data released Tuesday by the National Association of Realtors.

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The pace of sales declined 1% in December to a seasonally adjusted annual rate of 4.94 million, according to NAR. For all of 2012, existing-home sales hit 4.65 million, the highest level since 2007 and up 9.2% from 2011.
“Record-low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” said Lawrence Yun, NAR’s chief economist.
U.S. stocks declined after the housing data’s release but then traded mixed at midday on Wall Street. Read more about stocks.
The rate in November was revised to 4.99 million from a prior estimate of 5.04 million, which was the highest rate since November 2009. Economists polled by MarketWatch had expected a rate of 5.1 million for December, with buyers eager to take advantage of relatively high affordability in a housing market that is gaining steam. See economic calendar.
Buyers’ concerns about the so-called fiscal cliff may be at least partially behind December’s sales decline, wrote Millan Mulraine, macro strategist at TD Securities, in a research note.
“Given this, we anticipate that sales activity could rebound in January following the tax deal, given the very supportive buying conditions and the increasing incentive for first-time buyers (who are currently sitting on the fence) to slowly move into the market as prices begin to firm,” Mulraine wrote.
By region, it was a mixed bag. December’s existing-home sales fell by 5.9% in the Midwest and by 3% in the South, compared with the prior month; sales rose by 5.1% in the West and by 3.2% in the Northeast.
Sales in each of the four regions were up from same period in the prior year.

Home sales up from last year

Despite the decline in December, existing-home sales are up 12.8% from the same period in the prior year. The median existing-home price rose 11.5% from the prior year to $180,800.
Inventories fell 8.5% to 1.82 million units in December, representing at the current sales rate a 4.4-month supply, the lowest supply ratio since 2005. It’s typical for inventories to decline in winter. However, Yun warned that persistently low inventory could lead to too much price growth in 2013.

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Construction workers at a new home going up in Miami last October.

“We don’t want to see a rapid appreciation in prices,” he said.
Meanwhile, the median price reached $176,600 in 2012, up 6.3% from the prior year for the highest annual growth since 2005.
Other recent housing data have also shown a market gaining strength but still has far to go.
A report on home-builder sentiment showed that confidence is holding at a more-than-six-year peak. Read more about builder sentiment.
Separately, a report showed that new home construction jumped 12% in December to the highest rate in more than four years, rushing past Wall Street’s expectations. Read more about home construction.