Existing home sales dropped precipitously in December from the month before, posting a 16.7% decline to to a seasonally adjusted annual rate of 5.45 million units, the National Association of Realtors reported Monday.

The decline, though expected, pushed the seasonally adjusted annual rate well below the level anticipated by Wall Street analysts of 5.9 million units. Still, December sales came in 15% above December 2008, and total sales for 2009 registered a 4.9% increase to 5.156 million homes, the first annual gain in the metric since 2005.

Prices also were up 1.5% over last December to $178,300, but NAR attributed the increase to a greater mix of middle and luxury level homes in the sales data. Distressed homes made up 32% of sales in December (36% for the year) and continued to put a drag on the median price for all of 2009, which was down 12.4% from 2008 at $173,500.

Single-family home sales fell 16.8% from November to a seasonally adjusted annual rate of 4.79 million in December, 12.7% above December 2008. For all of 2009, single-family sales rose 5.0% to 4,566,000. The median existing single-family home price was up 1.4% year-over-year to $177,500 in December.For the full year, the single-family median was $173,200, down 11.9% from 2008.

Existing condominium and co-op sales fell 15.4% to a rate of 660,000 in December, up 34.7% from December 2008. For all of 2009, condo sales rose 4.8% to 590,000 unit. The median existing condo price was up 1% to $183,700 in December. For all of last year, the median condo price was $176,100, 16.1% below 2008.

Lawrence Yun, the NAR's chief economist, attributed the sales decline to "swings driven by the tax credit," referring to the federal first-time homebuyer tax credit that expired in November that was replaced by a new credit that runs through April of this year for homes closed before the end of June. "We'll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit," Yun said. "By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010."

However, Yun cautioned, "The job market remains a concern and could dampen the housing recovery--job creation is key to a continued recovery in the second half of the year." According to the most recent Labor Department data, the official unemployment rate remains at 10% and the broader measure of employment plus underemployment, known to economists as "C-6," has the rate at 17.3% as of December.

The NAR estimated that 43% of transactions in December involved first-time homebuyers, down from 51% in November. Repeat buyers accounted for 42% of sales, up from 37% in November. The remaining 15% of sales involved investors.

Regionally, the Northeast was down 19.5% to an annual rate of 910,000 in December, up 21.3% from last December, with the median price rising 3.2% year-over-year to $241,700. The Midwest fell 25.8% to a level of 1.15 million, 8.5% ahead of December 2008, with the median price up 1.8% to $143,200. The South dropped 16.3% to an annual pace of 2.01 million, up 15.5% from a year ago, but the median price dropped 1% to $152,000. The West was down a more modest 4.8% to a rate of 1.38 million, up 15.0% from last December, with the median price up 2.7% to $236,000.