After several months of stable activity, existing-home sales slipped 2.2 percent in December from the previous month, to a seasonally adjusted annual rate of 4.89 million units, the National Association of Realtors (NAR) reported yesterday. It was a 22 percent drop from the 6.27 million sales recorded in December 2006.

With total sales of 5,652,000, 2007 represented the fifth highest year on record. But as evidence of the widespread housing downturn in 2007, that total was 12.8 percent below the 6,478,000 sales recorded in 2006.

The national median existing-home price for all housing types--single-family, condominiums, townhomes and co-ops--also dropped to $208,400, down 6 percent from $221,600 in the same period in 2006. For all of 2007, the median price was $218,900, down slightly from the median of $221,900 in 2006.

In a bit of good news, total housing inventory fell 7.4 percent at the end of December to 3.91 million existing homes available for sale. That represents at 9.6-month supply at the current sales pace, down from a 10.1-month supply in November.

As builders have stressed for months, housing conditions can vary widely by market. In a statement, NAR President Richard Gaylord commented that many local markets are healthy or improving, citing high home sales in December in such diverse areas as San Antonio, Tex.; Syracuse, N.Y.; Springfield, Ill.; and Sarasota, Fla.

NAR Chief Economist Lawrence Yun called the market uncharacteristically weak, despite improved affordability in many markets. "We have lower home prices, we're still creating jobs, and incomes are going up," Yun said. "There is more financial capacity than last year or two years ago, but there is still hesitancy from buyers."

He expressed optimism, however, about the "bold cut in the Fed funds rate" that was announced this week. If that were combined with an increase in conventional mortgage loan limits, which would give more buyers access to safe, affordable credit, it could provide a quick boost to the market.

"The current soft sales reflect that subprime has disappeared from the marketplace," Yun said. "That's a good thing for the long haul, but in the short term, it's holding back sales," he said. "This new market inducement will filter into the buyer's mindset. I anticipate spring, or possibly summer, for a notable increase in sales."

Celia Chun, director of housing economics for Moody's, says she foresees home sales continuing to be weak for at the first half of the year with "a bit more stabilization" in the second half.

"There have been some policy actions that will hopefully make it a little easier for home buyers, but it's not enough," Chen says. "The interest rate cuts have brought down mortgage rates, but it won't result in a rebound of the housing market. The main barrier isn't the cost of borrowing, it's the credit standards and coming up with enough money for a down payment."

Breaking out the statistics by product type, single-family home sales slipped 2 percent to a seasonally adjusted annual rate of 4.31 million in December from 4.4 million in November. For the year, single-family sales fell 13 percent to 4.94 million.

The median existing single-family home price was $206,500 in December, down 6.5 percent from a year earlier. For the year, the single-family median was $217,800, down 1.8 percent from 2006.

Existing condominium and co-op sales fell 3.3 percent to a seasonally adjusted annual rate of 580,000 units in December from 600,000 in November, and are 24.5 percent below the 768,000-unit pace a year ago. Condo sales for all of 2007 fell 11 percent to 713,000 units.That piece of data surprised Chen, who says that "generally, condo markets collapse pretty quickly because it's a smaller market and a lot of the buyers are investors. That's not showing up in the data yet."

No region of the country reported either an increase in sales or median price. The Northeast saw the biggest drop in existing-home sales, declining 4.6 percent to an annual rate of 830,000 in December, and down 22.4 percent from the previous December.

In the West, existing-home sales slipped 2.1 percent to an annual rate of 940,000 in December, 24.8 percent below December 2006. Sales in the Midwest declined by 1.7 percent, and the South experienced a 1 percent reduction.

The Midwest region saw the least amount of reduction in pricing. At $159,800, the median price was 3.9 percent lower than in December 2006. Median home prices in the South declined 4.1 percent to $173,400. In the Northeast, the $258,600 median price represented an 8.9 percent decline from the previous December. The largest drop was in the West, where the median price dropped 11.1 percent in December 2006 to $309,800.