(WASHINGTON) -- Sales of previously-owned homes hit a milestone pace in December, providing a bit of good news to end a year in real estate that’s been short on positives.
The National Association of Realtors says people purchased existing homes at an annual pace of 5.28 million units. It’s the first time the pace has been above the five million mark since the government’s tax incentive program ended in June.
Economists were surprised by the strong sales of homes in December; they’d been expecting sales at around a 4.8-million-unit pace.
Some experts say a recent uptick in mortgage rates might be pushing some buyers to move quicker than they expected to so they can lock in lower interest rates.
About 4.9 million existing homes were sold during the 2010 calendar year. That’s the lowest number of annual sales since 1997 and is about five percent fewer homes sold than 2009. Housing analysts say the expiration of the Federal government’s tax credit program for home purchases slowed things down in 2010.
But December’s strong performance is giving people confidence that the housing market might stabilize in the next year.
“The December pace is near the volume we’re expecting for 2011, so the market is getting much closer to an adequate, sustainable level,” said Lawrence Yun, chief economist for the realtors group. “The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain.”
The median price of a home sold in December was $168,800, down one percent from the price a year ago.
Prices will likely start showing a little stability in the next few months as the supply of homes for sale is ticking lower. Realtors say there were 3.6 million “For Sale” signs on yards at the end of December. That’s 8.1 months supply given the current pace of sales and is getting really close to the six month supply economists say we need to see to get historically normal home price appreciation.
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