Are Existing Home Sales Starting to Crack?
Existing home sales in the United States unexpectedly declined in December, but still finished the year in positive territory, as low mortgage rates and inventory levels support the industry.
On Tuesday, the National Association of Realtors announced that total existing home sales, which are completed transactions that include single-family homes, town-homes, condos and co-ops, dropped 1.0 percent to a seasonally adjusted annual rate of 4.94 million units in December. In comparison, November showed a downwardly revised 4.99 million units in November.
However, December still had the second highest rate of sales since November 2009. The preliminary annual total for existing home sales in 2012 came in at 4.65 million, representing a 9.2 percent increase from 2011 and the best level in five years.
Lawrence Yun, NAR chief economist, explains, “Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales. The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013.”