Sales of existing homes declined 1% in December to a seasonally adjusted annual rate of 4.94 million, the National Association of Realtors reported Tuesday. Why the markets found this small decline so disturbing yesterday is somewhat of a mystery. It is the Holiday Season and many families stop looking for a new home. If you are a seller, who wants someone tramping through their home just before guests are arriving to celebrate Tidings of Great Joy?
This period and the one just after July 4 until Labor Day have traditionally been recognized as the slowest times of the year.
“Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales,” said Lawrence Yun, NAR’s chief economist. Rates are low and staying low for the moment. This morning as I write the the mortgage backed securities futures are all green, up slightly from yesterday.
Perhaps the disappointment lies in economists’ expectations. Assumptions, presumptions and expectations can all lead to disappointment.
Despite the decline in December, existing-home sales are up 12.8% from the prior year. That’s not too shabby.
The median existing-home price rose 11.5%.
Inventories fell 8.5% to 1.82 million units in December, representing the lowest supply ratio since 2005.
The median price reached $176,600 (nationwide) in 2012, up 6.3% from the prior year for the highest annual growth since 2005.
Taken altogether, these stats could be interpreted as a market on the mend. Not a market on fire, but one that is finally piecing itself back together.