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
Region $0-100K $100-250K $250-500K $500-750K $750K-1M $1M+
Northeast 12.2% 11.9% 14.9% 31.4% 29.7% 61.0%
Midwest 2.2% 4.3% 18.9% 0.2% 15.5% 13.1%
South 14.7% 9.5% 13.4% 20.7% 17.5% 38.4%
West 27.2% 18.2% 11.9% 22.0% 16.2% 17.2%
U.S. 12.2% 10.8% 14.2% 22.4% 20.5% 35.4%
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:

  1. Indianapolis (12.8%)

  2. Pittsburgh (12.0%)

  3. Cincinnati (11.7%)

  4. Boston (10.8%)

  5. 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.

Related Articles
  1. Investing News

    Hillary Clinton's Liberal Orthodoxy

    Clinton's economic agenda laid out in July is divided into three broad groups: strong growth, fair growth and long-term growth. And her overarching goal is to "give working families a raise."
  2. Home & Auto

    The Pros and Cons of Buying Vs. Building a Home

    Before you decide whether to buy or build a home, you should weigh the advantages and disadvantages of each scenario.
  3. Real Estate

    The 5 Best Real Estate Lawyers in Boston

    Discover some of the best real estate lawyers working in Boston, and read more about their legal experience and special practice areas.
  4. Retirement

    Pittsburgh's 5 Best Retirement Communities

    Discover why many retirees are settling in Pittsburgh; read about several retirement communities in the area and their attractive qualities.
  5. Home & Auto

    When Should You Consider Taking out a HELOC?

    Home equity lines of credit, or HELOCs, have gotten a bum rap since the housing meltdown. But used correctly, they can be a cheap way to access capital.
  6. Home & Auto

    What to Do When You Can't Pay Back Your HELOC

    Home equity lines of credit can be a cheap way to tap the equity in your home, but will you risk losing your home if you can't make the repayments?
  7. Credit & Loans

    How Balloon Payments Work

    30-year mortgage borrowers will typically make equal payments over 30 years until the loan’s principal and interest have been paid. A loan’s interest rates will likely be lower if it includes ...
  8. Home & Auto

    Buying a Home? The Best Places Share this Feature

    The most lucrative areas to invest in a home are cities where job growth is robust.
  9. Home & Auto

    How to Invest When You Buy Your First Home

    Homeownership isn't cheap these days thanks to the down payment and closing costs. Savers who are putting away money have to invest it differently.
  10. Credit & Loans

    4 Ways to Refinance a Home Equity Line of Credit

    There's more than one way to get more affordable monthly payments on your home equity line of credit through refinancing or loan modification.
RELATED FAQS
  1. Do FHA loans require escrow accounts?

    Federal Housing Administration (FHA) loans require escrow accounts for property taxes, homeowners insurance and mortgage ... Read Full Answer >>
  2. How do I calculate how much home equity I have?

    Even though it is normally assumed most people know their home equity, many are still confused about the topic. It is an ... Read Full Answer >>
  3. What are the typical requirements to qualify for closed end credit?

    Typical requirements for a consumer to qualify for closed-end credit include satisfactory income level and credit history, ... Read Full Answer >>
  4. What are some examples of financial markets and their roles?

    Some examples of financial markets and their roles include the stock market, the bond market and the real estate market. ... Read Full Answer >>
  5. What price-to-book ratio is considered average in the chemicals sector?

    You can use Microsoft Excel to calculate the loan-to-value ratio if you have the mortgage amount and appraised value of a ... Read Full Answer >>
  6. How does the loan-to-value ratio affect my mortgage payments?

    Several factors affect the mortgage rate you can obtain when you purchase a home. Lenders analyze credit histories and scores ... Read Full Answer >>
Trading Center