National existing-home sales dropped for the third consecutive month in December, and were down 3.1 percent over December 2004, the National Association of Realtors reported today.
Total existing-home sales – including single-family, town homes, condominiums and co-ops – fell 5.7 percent in December to an adjusted annual rate of 6.6 million units, down from a revised pace of 7 million in November. The adjusted annual rate is a projection of a monthly sales total over a 12-month period, accounting for seasonal variations.
There were 7,072,000 existing-home sales in 2005, up 4.2 percent from 6,784,000 in 2004. This is the fifth consecutive annual record, according to the association’s announcement. The trade group began tracking the sales series in 1968.
David Lereah, NAR’s chief economist, said he expected the monthly sales decline. “This is part of the market adjustment we’ve been discussing, with a soft landing in sight for the housing sector. The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead,” he said.
“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 year’s 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 price 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, senior vice president of Cendant Corp.’s NRT Inc., said, “We’re 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. 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.”
Total housing inventory levels declined 4.4 percent at the end of December to 2.8 million existing homes available for sale, which represents a 5.1-month supply at the current sales pace.
Existing condominium and cooperative housing sales increased 1.6 percent to a seasonally adjusted annual rate of 877,000 units in December from a level of 863,000 in November. Last month’s sales activity was 4.5 percent higher than the 839,000-unit pace in December 2004. For all of 2005, condo sales jumped 9.3 percent to 896,000 units, the 10th consecutive annual record.
The median existing condo price was $228,100 in December, which was 10.2 percent above a year ago. In 2005, the median condo price was $218,200, up 12.7 percent from 2004.
Single-family home sales declined 6.8 percent to a seasonally adjusted annual rate of 5.72 million in December from 6.14 million in November, and were 4.2 percent lower than the 5.97 million-unit pace in December 2004. In 2005, single-family sales rose 3.6 percent to 6.18 million, the fifth straight yearly record.
The median existing single-family home price was $209,300 in December, which was 10.8 percent above a year ago. For 2005, the median single-family price was $207,300, up 12.6 percent from 2004.
Regionally, total existing-home sales in the Northeast held even at an annual sales rate of 1.09 million units in December, and were 3.5 percent lower than December 2004. The median price in the Northeast was $245,000, up 11.4 percent from a year ago.
In the Midwest, existing-home sales eased by 2.6 percent to an annual pace of 1.52 million in December, and were 1.9 percent below a year ago. The median price in the Midwest was $173,000, which was 10.9 percent higher than December 2004.
Existing-home sales in the South declined 7.2 percent in December to a level of 2.58 million, but were 1.2 percent higher than December 2004. The median price in the South was $182,000, up 4.6 percent from a year earlier.
In the West, existing-home sales fell 11.4 percent to a pace of 1.4 million in December, and were 11.4 percent below a year ago. The median existing-home price in the West was $318,000, up 14 percent from December 2004.
Existing-home sales, which include single-family, town homes, condominiums and co-ops, are based on transaction closings. This differs from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Because of these differences, it is not uncommon for each series to move in different directions in the same month, the association noted.
In addition, existing-home sales, which generally account for 85 percent of total home sales, are based on a much larger sample – nearly 40 percent of multiple listing service data each month – and typically are not subject to large prior-month revisions.
The only valid comparisons for median prices are with the same period a year earlier due to the seasonality in buying patterns. Month-to-month comparisons do not compensate for seasonal changes, especially for the timing of family buying patterns, according to the announcement.
Because there is a concentration of condos in high-cost metro areas, the national median condo price is higher than the median single-family price – in a given market area, condos typically cost less than single-family homes.
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