While a December drop-off in home sales is to be expected, since fewer homebuyers shop around the holidays, the National Association of Realtors (NAR) today reported a seasonally-adjusted drop of existing home sales by 16.7% in December.
Existing home sales dropped from 6.54 million in November 2009 to 5.45 million in December.
U.S. existing home sales were expected to drop in December despite rising steadily from September through November, primarily because the initial first-time homebuyer tax credit ended November 30.
But the 16.7% decline in existing home sales was the largest on record, dating back to 1968, NAR reported.
Economists surveyed by MarketWatch had anticipated an 11% drop in existing home sales, so this deeper drop was unexpected.
However, existing home sales were 15% higher in December 2009 compared with December 2008. Many real estate experts believe the year-over-year comparisons are a better way to evaluate home sales since they reflect the natural fluctuations of the real estate market.
For all of 2009, existing home sales rose by 5.0%.
Lawrence Yun, NAR chief economist, said there were no surprises in the data. "It's significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit," he said. "We'll likely have another surge in the spring as homebuyers take advantage of the extended expanded tax credit. By early summer the overall market should benefit from more balanced inventory and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery - job creation is key to a continued recovery in the second half of the year."
Existing condominium and co-op sales fell 15.4% nationally from November to December, but are 34.7% higher than in December 2008. For all of 2009, condo and co-op sales rose 4.8%.
Regionally, existing home sales dropped 19.5% in the Northeast in December compared with November, but rose by 21.3% over December 2008.
In the Midwest, existing home sales fell 25.8 from November to December 2009, but are 8.5% higher than December 2008.
In the South, existing home sales dropped by 16.3% from November to December,but rose 15.5% over December 2008.
In the West, existing home sales dropped by 4.8% from November to December 2009, but are 15.5% higher than in December 2008.
Written by Michele Lerner
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