But the data from the National Association of Realtors includes a carryover of delayed transactions from November into December as a result of the Know Before You Owe initiative.
However the existing homes sales index shows a rise in sales in all four major regions, led by the South and West and transactions are now up 7.7% year on year. It means that 2015 was the best year of existing home sales at 5.26 million since 2006 when it was 6.48 million.
‘While the carryover of November's delayed transactions into December contributed greatly to the sharp increase, the overall pace taken together indicates sales these last two months maintained the healthy level of activity seen in most of 2015,’ said Lawrence Yun, NAR chief economist.
‘Additionally, the prospect of higher mortgage rates in coming months and warm November and December weather allowed more homes to close before the end of the year,’ he added.
Prices are also rising. The median existing home price for all housing types in December was $224,100, up 7.6% from December 2014, the 46th consecutive month of year on year gains.
The data also shows that total housing inventory at the end of December dropped 12.3% to 1.79 million existing homes available for sale, and is now 3.8% lower than a year ago. Unsold inventory is at a 3.9 month supply at the current sales pace, down from 5.1 months in November and the lowest since January 2005 when it was 3.6 months.
‘Although some growth is expected, the housing market will struggle in 2016 to replicate last year's 7% increase in sales. In addition to insufficient supply levels, the overall pace of sales this year will be constricted by tepid economic expansion, rising mortgage rates and decreasing demand for buying in oil-producing metro areas,’ Yun explained.
The share of first time buyers was at 32% in December, matching the highest share since August, up from 30% in November and 29% a year ago. First time buyers in all of 2015 represented an average of 30%, up from 29% in both 2014 and 2013. A separate NAR survey from the NAR revealed that the annual share of first time buyers in 2015 was at its lowest level in nearly three decades.
‘First time buyers were for the most part held back once again in 2015 by rising rents and home prices, competition from vacation and investment buyers and supply shortages,’ said Yun.
‘While these headwinds show little signs of abating, the cumulative effect of strong job growth in recent years and young renters' overwhelming interest to own a home should lead to a modest uptick in first time buyer activity in 2016,’ he explained.
All-cash sales were 24% of sales in December, down from 27% in November and are down from 26% a year ago. Individual investors, who account for many cash sales, purchased 15% of homes in December, down from both 16% in November and 17% a year ago. Some 64% of investors paid cash in December.
Properties typically stayed on the market for 58 days in December, an increase from 54 days in November but below the 66 days in December 2014. Short sales were on the market the longest at a median of 86 days in December, while foreclosures sold in 68 days and non-distressed homes took 57 days while 32% of homes sold in December were on the market for less than a month.
‘December's rebound in sales is reason for cautious optimism that the work to prepare for Know Before You Owe is paying off. However, our data is still showing longer closing timeframes, which is a reminder that the near term challenges we anticipated are still prevalent,’ said Tom Salomone, NAR president.
The data also shows that distressed sales, foreclosures and short sales, fell by 8% in December, down from 9% in November and 11% a year ago. Some 6% of December sales were foreclosures and 2% were short sales.
Foreclosures sold for an average discount of 16% below market value in December compared to 15% in November, while short sales were discounted 15%, unchanged from November.
A breakdown of the data shows that single family home sales jumped 16.1% to a seasonally adjusted annual rate of 4.82 million in December from 4.15 million in November, and are now 7.1% higher than a year ago. The median existing single family home price was $226,000 in December, up 8% from December 2014.
Existing condominium and co-op sales increased 4.9% to a seasonally adjusted annual rate of 640,000 units in December from 610,000 in November, and are now 12.3% above December 2014. The median existing condo price was $209,900 in December, which is 4.9% above a year ago.
December existing home sales in the Northeast increased 8.7% to an annual rate of 750,000, and are now 11.9% above a year ago. The median price in the Northeast was $255,700, which is 5.3% above December 2014.
In the Midwest, existing home sales jumped 10.9% to an annual rate of 1.22 million in December, and are now 9.9% above December 2014. The median price in the Midwest was $171,000, up 7.5% from a year ago.
Existing home sales in the South leaped 14.6% to an annual rate of 2.27 million in December, and are now 4.6% above December 2014. The median price in the South was $196,100, up 6.8% from a year ago.
Existing home sales in the West increased 23.2% to an annual rate of 1.22 million in December, and are now 8.9% higher than a year ago. The median price in the West was $321,100, which is 8.2% above December 2014.
