The National Association of Realtors® reported that existing home sales declined 16.7% in December when compared with the prior month. Sales of 5.45 million units (which include single-family homes, townhomes, condominiums and co-ops) were well below the 6.54 million sold in November 2009. The declines hit every region with the annual pace in the Northeast falling by 19.5%, the Midwest by 25.8%, the South by 16.3% and the West by 4.8%.
Why The Slip?
Much of December's slip was blamed on the first-time homebuyers' tax credit, which was scheduled to expire in November before being extended. The extension of the $8,000 tax credit through 2010, an increase in the income level permitted for buyers seeking to qualify for the credit and the addition of a $6,500 credit for buyers that lived in their current residence for at least five consecutive years should provide some support to sales in the year ahead. (Find out more in The Truth About The First-Time Homebuyer Tax Credit.)
Regions On The Rise
While December was a down month, the numbers were still 15% higher than the 4.74 million sold in December 2008 and, compared to the prior year, showed gains in every region and in every price range. The Northeast fared particularly well, as record-setting Wall Street bonuses boosted sales of properties in the $1 million and up category. The Hamptons, a legendary retreat for Wall Street's well-heeled crowd, posted a 59% gain in sales for the final quarter of the year.
The least expensive homes, those under $100,000, sold particularly well in the West versus sales in December 2008 with an increase of 27.2%. In the Midwest, tough economic times limited gains in homes sales, with three of the six price ranges posting anemic single-digit gains, as shown below.
|Regional Sales by Price - Existing Single Family Homes, December 2009|
|% Change in Sales from 1 Year Ago|
|Source: National Association of Realtors®|
Metro Areas Heading Up
The top five major metropolitan areas in terms of existing single-family home price increases compared to a year ago were:
- Indianapolis (12.8%)
- Pittsburgh (12.0%)
- Cincinnati (11.7%)
- Boston (10.8%)
- Washington, D.C. (7.0%)
In the 20 major metropolitan areas tracked in the Existing Home Sales report, the top three in terms of sales gains over the prior year were Portland (+52.6%), Miami/Fort Lauderdale (+30.2%) and New York (+28.4%). (If you were hard-hit by the real estate crash, you may be wondering when things will get better for you. We show you how to keep tabs in 8 Signs Your Neighborhood Is On The Upswing.)
Double-digit gains were also seen in Baltimore (+16%), Atlanta (+14.8%), Boston (+14.6%), New Orleans (13.3%) and Phoenix (12.1%). In Baltimore, Miami/Fort Lauderdale, Phoenix and Portland, those sales gains were accompanied by declines in the median sales prices. In many areas, sales of distressed homes (which accounted for 32% of sales in December) dragged down prices.
Indianapolis, Saint Louis, and Kansas City had the only declines, falling by 13.1%, 3.4% and 2.5%, respectively. While sales fell from the prior year, median prices in Indianapolis and Kansas City both gained.
The Bottom Line
Overall, the data painted a much better picture than was seen one year ago. Despite the slip for the month, 2009 was the first year since 2005 that the Existing Home Sales report showed an annual gain. The year saw 5,156,000 sales, which bested the 4,913,000 total for 2008 by 4.9%. A challenging economic environment, high unemployment, an anticipated surge in home foreclosures and the possibility of interest rates hikes may make 2010 a more challenging year for the real estate market.