Home sales hit 11-month high

WASHINGTON Fri Jan 20, 2012 4:52pm EST

A view of a house for sale is seen in Los Angeles in this February 24, 2010 file photo.  REUTERS/Mario Anzuoni/Files

A view of a house for sale is seen in Los Angeles in this February 24, 2010 file photo.

Credit: Reuters/Mario Anzuoni/Files

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WASHINGTON (Reuters) - Home sales hit an 11-month high in December and the number of properties on the market was the fewest in nearly seven years, pointing to a nascent recovery in the housing sector.

The National Association of Realtors said on Friday existing home sales increased 5 percent to an annual rate of 4.61 million units, with all four of the nation's regions recording gains.

Sales of both multifamily and single-family homes rose.

"It seems that the housing sector may be slowly picking itself up off of the mat," said Omair Sharif, an economist at RBS in Stamford, Connecticut.

The fairly upbeat data and reports that debt-stricken Greece was close to a deal with its private-sector creditors pushed U.S. Treasury debt prices lower. Stocks on Wall Street were mixed, while the dollar was little changed against a basket of currencies.

While the home sales pace was a touch below economists' expectations, December marked the third straight month of gains, adding to hopes that a tentative recovery was taking shape.

But a glut of unsold properties that is weighing down on prices and stringent lending practices by banks is likely to make progress painfully slow.

SHADOW INVENTORY WORRIES

There were 2.38 million unsold homes on the market last month, the fewest since March 2005. That represented a 6.2 months' supply at December's sales pace, the lowest since April 2006 and down from a 7.2 months' supply in November.

The Realtors group noted, however, that the inventory of unsold homes tends to decline in winter.

A supply of 6 months is generally considered ideal and anything higher suggests prices will decline further.

The median sales price fell 2.5 percent to $164,500 in December from a year ago. For 2011 as a whole, prices dropped 3.9 percent to an average of $166,100, the lowest since 2002.

Further pressure could come in the months ahead as banks finish working out kinks in the foreclosure process and push more homes onto the market.

"That so-called 'shadow' inventory has to come to the market eventually and will keep downward pressure on home prices long after a pickup in building and sales activity," said Ellen Zentner, a senior economist at Nomura Securities in New York.

LOOKING TO HELP

The Federal Reserve has suggested a number of ways other policymakers could step in to help the beaten-up market, including giving government-controlled mortgage finance firms Fannie Mae and Freddie Mac a bigger role in refinancing loans.

Some officials at the Fed say the central bank should consider further purchase of mortgage-backed securities as a way to help spur a stronger recovery, but no action is expected at a policy meeting next Tuesday and Wednesday.

The data on previously owned homes was just the latest in a number of signals on housing to show improvement, gains economists pinned to an improving labor market.

Data earlier this week showed single-family home starts rose for a third straight month in December and optimism among builders this month was the highest in four-and-a-half years.

"It is very encouraging that the current phase of the recovery is being driven by economic fundamentals as opposed to being fostered by temporary stimulus," said Millan Mulraine, a senior macro strategist at TD Securities in New York.

Existing home sales in December were up 3.6 percent from a year earlier. A total of 4.26 million homes were sold last year, up 1.7 percent from 2010.

But the road to recovery will be bumpy. Distressed properties, foreclosures and short sales, which typically occur at deep discounts, accounted for 32 percent of overall sales last month, little changed from November.

A third of pending existing home sales contracts were canceled, the NAR said.

"There is every reason to believe that banks are not going to reduce credit standards back to pre-recession days, when all that was required was the ability to fog a mirror - and only a faint fog was necessary," said Steven Blitz, a senior economist at ITG Investment Research in New York.

"This, plus the slow pace of the upturn, will keep the housing market from a dynamic turn. It is, however, increasingly safe to say the market has finally turned positive."

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

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Comments (10)
Harry079 wrote:
With single family home prices down as much as 60% in some markets I’m not surprised to see a increase sale of existing homes.

I seem to recall at the end of 2010 there were 18 million empty home in the country. Modern day carpetbaggers are now buying homes in bulk from banks for less than 50 cents on the dollar.

These carpetbaggers will rent out these homes to people making minimum wages where it will take three or four working people per unit to make the rent.

The Grand Plan of the Super Elite is nearly complete.

Cut the masses wages to barely existence level.

Steal their wealth by trading dollars for the treasure they posess.

Seize their property through legal channels.

Blame the working person for the problems of all levels of Government.

Put down protests through Civil Rights take-aways.

You all know how the rest of the story goes.

Jan 20, 2012 10:45am EST  --  Report as abuse
StevefromFL wrote:
Harry079 hit all of the notes…

When the American people wake up and demand fairness?

Is self interest only for the 1%?

Jan 20, 2012 10:59am EST  --  Report as abuse
garrisongold wrote:
Maybe they are and maybe they aren’t at an 11 month high. The NAR has lost all credibility, especially given there prior years revisions they announced just a month or so ago. Like business as usual, they want the buying public to think that demand is high for homes and there will not be further erosion of home prices in the future, so it’s a safe investment. But they have a vested interest in the sales hype don’t they?

Jan 20, 2012 11:25am EST  --  Report as abuse
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