Existing-Home Sales Down in December But 2005 Sets a Record
WASHINGTON (January 25, 2006) – Existing-home sales declined in December but easily set an annual record, according to the National Association of Realtors®.
Total existing-home sales – including single-family, townhomes, condominiums and co-ops – were down 5.7 percent to a seasonally adjusted annual rate1 of 6.60 million units in December from an upwardly revised pace of 7.00 million in November. Sales were 3.1 percent lower than a 6.81 million-unit level in December 2004.
There were 7,072,000 existing-home sales in all of 2005, up 4.2 percent from 6,784,000 in 2004. This is the fifth consecutive annual record; NAR began tracking the sales series in 1968.
David Lereah, NARs chief economist, expected the monthly sales decline. This is part of the market adjustment weve been discussing, with a soft landing in sight for the housing sector, he said. The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last years record.
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.27 percent in December, down from 6.33 percent in November; the rate was 5.75 percent in December 2004. Last week, Freddie Mac reported the 30-year fixed rate was down to 6.10 percent.
Mortgage interest rates have been trending down from a peak in November, and are lower than expected – if lower interest rates are sustained, the housing market could see some unexpected lift, Lereah said.
The national median existing-home price2 for all housing types was $211,000 in December, up 10.5 percent from December 2004 when the median was $191,000. The median is a typical market price where half of the homes sold for more and half sold for less.
For all of 2005, the median price was $208,700, up 12.7 percent from a median of $185,200 in 2004.
NAR President Thomas M. Stevens from Vienna, Va., said it may take a while for home price growth to cool. Were coming off of five years of tight supply, and many sellers are accustomed to expecting very strong price gains and exceptional returns on their investment, said Stevens, senior vice president of NRT Inc. With the supply of homes improving and buyers having more choices, the rate of price growth should come down to more normal levels this year.
Article courtesy of Realtor.Org.
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