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The latest stats are out on 2005 sales and specifically on how December
fared when compared to previous years and it's not all good news.
Total existing-home sales were down 5.7% in December from. Sales were
also 3.1% lower than in December 2004.
However the detail figures reveal interesting regional differences. In
the Northeast, where the first signs of a slowdown were reported in the
early fall, sales in December held even, indicating the market may be
beginning to find its balance. In the West by contrast, December sales fell
over eleven percent, perhaps indicating that the red-hot market out west is
showing signs of a correction.
Overall, sales in 2005 were up 4.2% when compared to 2004 but much of the
gain came in the first half of the year. The gains in 2005 mark the fifth
consecutive year of increasing sales.
In reviewing the figures, David Lereah of the National Association of
Realtors, 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.”
Mortgage Rates Remain Low
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.
Nation Average Price Growth Expected To Slow
The national median existing-home price 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 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. “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.”
Inventory Down 4.4%
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.
Condos Remain Strong
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 price 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 Homes Sales Down
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.
Regional Sales In December
Northeast - Total existing-home sales 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.
Midwest - Sales dropped 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.
South - Sales 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.
West - 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.
The annual rate for a particular month represents what the total number
of actual sales for a year would be if the relative pace for that month were
maintained for 12 consecutive months. Seasonally adjusted annual rates are
used in reporting monthly data to factor out seasonal variations in resale
activity. For example, home sales volume is normally higher in the summer
than in the winter, primarily because of differences in the weather and
family buying patterns.
Existing-home sales, which include single-family, townhomes, condominiums
and co-ops, are based on transaction closings. This differs from the U.S.
Census Bureau’s series on new single-family home sales, which are based on
contracts or the acceptance of a deposit. Because of these differences, it
is not uncommon for each series to move in different directions in the same
month. In addition, existing-home sales, which generally account for 85
percent of total home sales, are based on a much larger sample – nearly 40
percent of multiple listing service data each month – and typically are
not subject to large prior-month revisions.
The only valid comparisons for median prices are with the same period a
year earlier due to the seasonality in buying patterns. Month-to-month
comparisons do not compensate for seasonal changes, especially for the
timing of family buying patterns.
Because there is a concentration of condos in high-cost metro areas, the
national median condo price is higher than the median single-family price.
In a given market area, condos typically cost less than single-family homes.
Data Source: National Association Of
Realtors |
