Existing Home Sales Fall Back 16.7%; Median Sales Price Up 4.9%

In December, existing home sales fell back heavily by 16.7% to an annualized pace of 5.45 million units, following months of large increases. The decline places sales at a pace near what occurred in September. The drop was likely driven due the effects of the home buyer tax credit wearing off. Sales saw a temporary boost in the prior months and now the pace is likely returning back to “normal.” Despite the decline however, from a year prior, sales were up still up 15.0%.

With this large decrease in the pace of sales, the months supply of inventory rose from 6.5 to 7.2. The supply of inventory will have to continue to decline before prices can be certain to have bottomed out. Despite this rise, over the month the median sales price rose 4.9% to $178,600. From a year prior, prices were up 1.2%, the first year-over-year increase since 2006.