Existing home sales dipped to a 4.94 million unit annualized rate in December, after being revised down slightly to a 4.99 million unit rate in November. A sharp drop in the backlog of homes for sale on the market is one of the reasons for the decline. The National Association of Realtors is reporting that raw inventories have fallen to lowest level since January 2001.
Foreclosures and short sales are harder to find for investors, but may come back on the market as more are released by banks later in the year, while owners with turnkey properties are opting to remodel instead of sell. First-time buyers are also facing hurdles. Many are too saddled with an overhang of student debt to qualify for a mortgage.
Disruptions from Superstorm Sandy, which hurt sales most in October, are starting to abate. The Northeast and West posted gains in sales during December, while sales in the Midwest and South deteriorated slightly.
Home prices continued to firm in response to tight inventories, fewer first-time buyers and a shrinking supply of distressed sales. The rise in prices has prompted remodeling but little in terms of increased listings. Spring will bring the real test on that front.
Bottom Line: The housing market continues to heal, especially when measured on a year-over-year basis. Gains remain uneven, however, and off a low base, something that the Federal Reserve would like to alter.