After falling 6.1% in November, existing-home sales were at a seasonally adjusted annual rate of 5.04 million in December – up 2.4% from a downwardly revised 4.92 million in November and up 3.5% compared to December 2013, according to the National Association of Realtors (NAR).
Median home prices for 2014 rose to their highest level since 2007, but total sales fell 3.1% from 2013.
There were a total of about 4.93 million existing-home sales in December, a 3.1% decline from 2013's rate of 5.09 million.
The national median existing-home price was $208,500, up 5.8% from $197,100 in December 2013 to the highest level since 2007.
Lawrence Yun, chief economist for NAR, says the slight pickup at the end of the year was an encouraging sign.
‘Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated,’ Yun says in a statement. ‘Sales were measurably better in the second half – up 8 percent compared to the first six months of the year.’
Total housing inventory at the end of December dropped 11.1% to 1.85 million existing homes available for sale. At the current sales rate, that's about a 4.4-month supply.
Unsold inventory was about 0.5% lower compared to December 2013, when the supply was about 1.86 million homes.
‘A drop in housing supply in December raises some affordability concerns in the months ahead, as minimal selection and the potential for faster price appreciation could offset the demand from buyers encouraged by a stronger economy and sub-4 percent interest rates,’ says Yun. ‘Housing costs – both rents and home prices – continue to outpace wages and are burdensome for potential buyers trying to save for a down payment while looking for available homes in their price range.’
About 29% of existing-home sales in December were to first-time home buyers, down from 31% in November but up from 27% a year ago. First-time buyers in 2014 represented an average of 29% for the second straight year.
A separate NAR survey released in late 2014 revealed that the annual share of first-time buyers fell to its lowest level in nearly three decades.
Chris Polychron, president of NAR, says Realtors are optimistic that the cuts in mortgage insurance premiums going into effect at the Federal Housing Administration (FHA) on Jan. 26 will help spur more first-time buyers to purchase homes in 2015.
‘NAR is a strong supporter of the FHA and its vital role in the mortgage marketplace for home buyers,’ he says. ‘Realtors support responsible lending to qualified borrowers, and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash.’
All-cash sales were 26% of transactions in December, up from 25% in November and up from 32% in December of last year.
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