The National Association of Realtors on Thursday morning (Jan. 24) reported that existing-home sales fell 2.2% to a seasonally adjusted annual rate of4.89 million in December, a drop of 22% from December, 2006.
More significantly, the Realtor group reported that the median price for all housing types was $208,400 in December, down 6% from a year earlier, when the median was $221,600. That is the largest price drop reported by NAR since the housing downturn began.
For the year, the NAR said prices were off 1.4% to $218,900, down from $221,900 in 2006. It was the first year-to-year drop in price recorded by NAR since it began tracking sales in the 1960s. For all of 2007, the NAR said there were 5,652,000 existing-home sales, down 12.8% from 2006.On a positive note, the Realtor group reported a drop of 7.4% in total existing home inventory in December, to 3.91 million, a 9.6-month supply, down from 10.1 months in November.
Single-family sales were down 2% to a seasonally adjusted annual rate of4.31 million, 21.6% below December 2006. For the year, single-family sales fell 13% to 4.94 million. The median single-family price fell 6.5% in December from the same month in 2006 to $206,500. For all of 2007, the single-family median was $217,800, down 1.8% from 2006.
Existing condominium and co-op were down 3.3% to a seasonally adjusted annual rate of 580,000 units in December, 24.5% below a year before, with median prices down 2.5% from December '06 to $222,200. Condo sales for all of 2007 fell 11.0% to 713,000 units, last month, which is 2.5 percent below December 2006, with median prices up 2% to $226,400.
Regionally, existing-home sales in the South fell 1% to an annual pace of1.97 million in December, 20.9% below December 2006, with the median price down 4.1% from December 2006 to $173,400. Sales in the Midwest declined 1.7% to a level of 1.16 million, 20.5% below a year ago, with the median price falling 3.9% to $159,800. Sales in the West dropped 2.1% to an annual rate of 940,000 in December, 24.8% below December 2006, with the median price down 11.1% to $309,800. Sales in the Northeast fell 4.6% to an annual rate of 830,000, 22.4% below a year ago, with the median price down 8.9% from December 2006 to $258,600.
Lawrence Yun, NAR chief economist, said, "Home sales remain weak despite improved affordability conditions in many parts of the country, but we could get a quick boost to the market if loan limits are raised in combination with the bold cut in the Fed funds rate." he said. "Although interest rates on jumbo loans have fallen somewhat, they remain well above conventional mortgage rates," Yun added. "It isn¹t surprising that the share of single-family homes selling for more than $500,000 fell to 12.4% of transactions in December from 14.2% a year ago."
NAR issued a forecast with the existing home figures that estimates a higher loan limit would increase annual home sales by nearly 350,000, reduce foreclosures by 140,000 to 210,000, and increase economic activity by $44 billion. It also figures raising the limit would reduce the supply of homes on the market by 1.0 to 1.5 months and strengthen home prices by 2.0 to 3.0 percentage points. In addition, NAR estimates as many as 500,000 jumbo loans would be refinanced to lower interest rates.