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Home sales increase despite low inventory

house keyDespite low inventory, sales of existing homes nationally increased 2.4 percent in December from November, according to a report released by the National Association of Realtors.

Total existing-home sales rose to a seasonally adjusted annual rate of 5.04 million last month from 4.92 million in November. Sales in December were up 3.5 percent from a year ago, and are now above year-over-year levels for the third consecutive month.

The Western and Southern regions are responsible for the increase, as those regional markets rose by an annual level of 9.8 percent and 3.8 percent, respectively, compared with November sales. Midwest and Northeast regional markets both saw annual decreases in sales compared with November.

Housing inventory in December dropped 11.1 percent to 1.85 million existing units available for sale, a 4.4-month supply – down from a 5.1-month supply in November. Unsold inventory is now 0.5 percent lower than a year ago. A 6-month’s supply is considered a balanced market.

“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,” said Lawrence Yun, chief economist at the association. “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.”

The national median price for all housing types in December was $208,500, which is 6 percent higher than the median price in December of 2013 and the highest since 2007, when it was $219,000.

Of the total existing-home sales, single-family home sales grew 3.5 percent on a seasonally adjusted annual basis from November and condominium and co-op sales decreased 5 percent. Single-family home sales rose 4 percent over the 4.3 million sales in December 2013, while condo and co-op sales stayed the same.

All-cash sales comprised 26 percent of sales in December, up from 25 percent in November but down from 32 percent a year ago.

Charlotte-area sales rose 15.7 percent in December to 3,050 existing units from 2,365 a year ago. The region’s median sales price last month was $180,000, up 4.3 percent from $172,500 the previous year, while the average sales price rose 2.4 percent to $229,437 in the same period. Inventory was at 4.1 months, down from 5.1 months in December 2013.

The time spent on the local market fell to 89 days from 114 in December 2013.

Other national figures that stood out in the report included:

  • The percentage of first-time buyers was 29 percent in December, down from 31 percent in November but up from 27 percent a year ago.
  • Foreclosures and short sales made up 11 percent of December sales, up from 9 percent in November but down from 14 percent a year ago.
  • Properties stayed on the market an average of 66 days in December, one day longer than in November but a slightly shorter period than a year ago, when it was 72 days.

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