Jan. 29, 2006
 
NAR: Existing Home Sales Decline in December, but 2005 Sets Record
 
By HNN Staff
 
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, town homes, condominiums and co-ops – were down 5.7% 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% 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% from 6,784,000 in 2004. This is the fifth consecutive annual record; NAR began tracking the sales series in 1968.
 
David Lereah, NAR’s chief economist, 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,” 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 year’s record.”
 
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.27% in December, down from 6.33% in November; the rate was 5.75% in December 2004. Last week, Freddie Mac reported the 30-year fixed rate was down to 6.10%.
 
“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% 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% 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. “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,” 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.”
 
Total housing inventory levels declined 4.4% at the end of December to 2.80 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% 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% higher than the 839,000-unit pace in December 2004. For all of 2005, condo sales jumped 9.3% to 896,000 units, the 10th consecutive annual record.
 
The median existing condo price3 was $228,100 in December, which was 10.2% above a year ago. In 2005, the median condo price was $218,200, up 12.7% from 2004.
 
Single-family home sales declined 6.8% to a seasonally adjusted annual rate of 5.72 million in December from 6.14 million in November, and were 4.2% lower than the 5.97 million-unit pace in December 2004. In 2005, single-family sales rose 3.6% 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% above a year ago. For 2005, the median single-family price was $207,300, up 12.6% 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% lower than December 2004. The median price in the Northeast was $245,000, up 11.4% from a year ago.
 
In the Midwest, existing-home sales eased by 2.6% to an annual pace of 1.52 million in December, and were 1.9% below a year ago. The median price in the Midwest was $173,000, which was 10.9% higher than December 2004. Existing-home sales in the South declined 7.2% in December to a level of 2.58 million, but were 1.2% higher than December 2004. The median price in the South was $182,000, up 4.6% from a year earlier.
 
In the West, existing-home sales fell 11.4% to a pace of 1.40 million in December, and were 11.4% below a year ago. The median existing-home price in the West was $318,000, up 14.0% from December 2004.