Existing-home sales dropped 8.4 percent in 2006 to 6.48 million from a record 7.08 million in 2005, the National Association of Realtors trade group reported today. The annual sales total was the third highest on record.
The national median existing-home price for all housing types was $222,000 in December, which is unchanged from December 2005. For all of 2006, the median price was also $222,000, up 1.1 percent from the median price in 2005.
The seasonally adjusted annual rate of existing-home sales in December — including single-family, townhomes, condominiums and co-ops — was 7.9 percent below the pace in December 2005 and 0.8 percent below the November rate.
This rate is a projection of a monthly sales total over a 12-month period, adjusted for seasonal fluctuations in sales activity.
Total inventory of for-sale housing in December dropped 7.9 percent since November to 3.51 million but was up 23.3 percent compared to inventory in December 2005. That represents a 6.8-month supply at the December sales pace, the association reported, compared with a 7.3-month supply in November and a 5.1-month supply in December 2005.
A supply of six months is generally considered to indicate a market that is roughly in equilibrium while a larger supply can indicate a buyer’s market and a lesser supply can indicate a seller’s market.
The rate of single-family home sales dropped 7.2 percent in December compared to December 2005, and were 1.3 percent below the November rate. Single-family sales fell 8.1 percent in 2006 compared to the prior year.
The rate of existing condo and co-op sales dropped 12.2 percent in December compared to December 2005 and rose 2.1 percent from the November 2006 rate. Condo and co-op sales for the full year in 2006 fell 14.3 percent compared to the prior year after setting 10 consecutive annual records.
The median existing single-family home price was $221,600 in December — the same as in December 2005 and up 2.3 percent since November 2006. For all of 2006, the median single-family price was $222,000, up 1.4 percent from 2005, the Realtor group reported.
The median existing condo price was $227,000 in December, up 0.3 percent compared to December 2005 and up 2 percent since November 2006. For all of 2006, the median condo price was $221,800, down 0.9 percent from 2005.
David Lereah, NAR’s chief economist, said in a statement, “Despite all of the doom-and-gloom stories and dire predictions over the last year, 2006 was the third-strongest year on record for existing-home sales. It looks like we’re moving beyond the low for the housing cycle last fall, and buyers are responding to historically low interest rates and competitive pricing by home sellers. In addition, a tightening inventory of homes on the market is supporting prices.”
The national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 6.14 percent in December, down from 6.24 percent in November, according to Freddie Mac. The December rate was the lowest since October 2005 when it averaged 6.07 percent, according to the report.
Pat Vredevoogd Combs, NAR president, said in a statement, “We expect home sales to rise modestly over the course of this year. Although local markets vary, price appreciation will be below normal in most of the country this year, but we’re looking for slow, steady gains in both home sales and prices through 2008.”
Regionally, existing-home sales in the Midwest rose 4.3 percent in December to a level of 1.47 million and were 5.8 percent lower than sales in December 2005. The median price in the Midwest was $167,000, down 2.9 percent from December 2005.
Existing-home sales in the South increased 0.8 percent to an annual sales rate of 2.49 million in December and were 7.1 percent below a year ago. The median price in the South was $182,000, unchanged from December 2005.
Existing-home sales in the Northeast declined 2.8 percent to a level of 1.04 million in December and were 5.5 percent below December 2005. The median existing-home price in the Northeast was $283,000, up 3.7 percent from a year earlier.
Existing-home sales in the West fell 9.1 percent to an annual pace of 1.2 million in December and were 15.5 percent lower than a year ago. The median price in the West was $349,000, up 1.5 percent from December 2005, the Realtor group reported.
Existing-home sales data is based on transaction closings and are based on a sample of about 40 percent of multiple listing service data each month.