Monday, January 25, 2010

Existing home sales plunge largest in 40 years

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From November to December, resale home sales sank nearly 17 percent in December, the largest month-to-month decline since 1968. Economists expected only a 10 to 11.6 percent decrease.

by Broderick Perkins
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Deadline Newsroom - Resale home sales tanked by nearly 17 percent in December, the largest month-to-month decline since 1968.

Economists surveyed by Dow Jones Newswires expected only an 11.6 percent decrease. Thomson Reuters' survey of economists forecasted a 10 percent decline.

(More home sales news)

The National Association of Realtors (NAR) were not surprised by the 16.8 percent decline, with buyers no longer rushing to cash in on the home buyer tax credit.

The first-time home buyer tax credit, credited with a previous three-month increase in resale homes, was due to expire Nov. 30, but Congress extended the credit until April 30 this year.

"It's significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit," said Lawrence Yun, NAR chief economist, said

"We'll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010," Yun added.

That's provided employment picks up.

"The job market remains a concern and could dampen the housing recovery – job creation is key to a continued recovery in the second half of the year," Yun also said.

NAR also said December 2009's resale sales remained 15.0 percent above sales in December 2008.

Home prices were up too. The median sales price of $178,300 in December was 1.5 percent more than it was a year ago, but the first yearly gain since August 2007.

Distressed homes continued to depress prices. They accounted for 32 percent of sales in December. For all of 2009, the median price was $173,500, down 12.4 percent from $198,100 in 2008. Distressed homes accounted for 36 percent of total sales last year.

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