Meanwhile, median home prices for 2014 rose to $208,500, their highest level since 2007 and 5.8% higher than 2013, the data from the National Association of Realtors shows.
Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, rose 2.4%. Compared to December 2013 sales were up 3.5% and are now above year-over-year levels for the third straight month.
Lawrence Yun, NAR chief economist, says sales picked up in December to close a 2014 that got off to a sluggish start but showed encouraging signs of activity the second half of the year.
‘Home sales improved over the summer once inventory increased, prices moderated and economic growth accelerated. Sales were measurably better in the second half, up 8% compared to the first six months of the year,’ he added.
Total housing inventory at the end of December dropped 11.1% to 1.85 million existing homes available for sale, which represents a 4.4 month supply at the current sales pace, down from 5.1 months in November. Unsold inventory is now 0.5% lower than a year ago when it was 1.86 million.
‘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% interest rates,’ explained Yun.
‘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,’ he pointed out.
The data also shows that the share of first time buyers was 29% percent in December, down from 31% in November but up from a year ago when it was 27%. First time buyers in 2014 represented an average of 29% for the second straight year.
All cash sales were 26% of transactions in December, up from 25% in November and 32% in December 2013. Individual investors, who account for many cash sales, purchased 17% of homes in December, up 2% from the previous month but down 4% from December 2013. Some 63% of investors paid cash in December 2014.
Distressed sales, foreclosures and short sales were up slightly in December at 11% compared with 9% in November but were down from 14% in December 2013. Some 8% were foreclosures and 3% were short sales. Foreclosures sold for an average discount of 15% below market value in December compared with 17% in November, while short sales were discounted 12% compared to 13% in November.
Properties typically stayed on the market the same amount of time in December at 66 days as November but for a slightly shorter time frame than a year ago when it was 72 days. Short sales were on the market the longest at a median of 98 days in December, while foreclosures sold in 61 days and non-distressed homes took 66 days. Some 31% of homes sold in December were on the market for less than a month.
A breakdown of the figures show that single family home sales increased 3.5% to a seasonally adjusted annual rate of 4.47 million in December from 4.32 million in November, and are 4% above the 4.3 million pace a year ago. The median existing single family home price was $210,200 in December, up 6.3% from December 2013.
Existing condominium and co-op sales declined 5% to a seasonally adjusted annual rate of 570,000 units in December from 600,000 in November, and are unchanged from a year ago. The median existing condo price was $204,000 in December, which is 3.2% higher than a year ago.
December existing home sales in the Northeast declined 2.9% to an annual rate of 660,000, but are 3.1% above a year ago. The median price in the Northeast was $246,600, which is 3.2% above a year ago.
In the Midwest, existing home sales fell 3.5% to an annual level of 1.09 million in December, and are now 2.7% below December 2013. The median price in the Midwest was $159,100, up 5.3% from a year ago.
Existing home sales in the South climbed 3.8% to an annual rate of 2.17 million in December, and are 7.4% above December 2013. The median price in the South was $184,100, up 6.6% from a year ago.
Existing home sales in the West jumped 9.8% to an annual rate of 1.12 million in December, and are 2.8% above a year ago. The median price in the West was $299,600, which is 5.6% above December 2013.
