Real estate dominated last week's financial headlines, with the big story being a sharp rise in sales of existing homes for December, according to a report from the National Association of REALTORS® (NAR).
Sales of existing single-family homes, townhomes, condominiums and co-ops rose 12.3 percent in December to a seasonally adjusted annual rate of 5.28 million from November's 4.7 million, marking the fifth sales gain in six months. That said, December's sales remain 2.9 percent below the 5.44 million pace of December 2009.
"December was a good finish to 2010, when sales fluctuate more than normal," noted NAR chief economist Lawrence Yun. "The pattern over the past six months is clearly showing a recovery. The December pace is near the volume we're expecting for 2011, so the market is getting much closer to an adequate, sustainable level.
"The recovery will likely continue as job growth gains momentum and rising rents encourage more renters into ownership while exceptional affordability conditions remain," he added.
The national median existing-home price for all housing types was $168,800 in December, marking a 1 percent decline from December 2009. This decline could most likely be chalked up to sales of distressed homes, according to Yun. Distressed homes rose to a 36 percent market share in December, from 33 percent in November and 32 percent in December 2009. Distressed homes are typically discounted 10 to 15 percent relative to traditional homes, which would dampen median prices, Yun explained.
Total housing inventory at the end of December fell 4.2 percent to 3.56 million existing homes available for sale, which represents an 8.1-month supply at the current sales pace, down from November's 9.5-month supply.
Meanwhile, permits for privately owned homes in December were at a seasonally adjusted annual rate of 635,000, which was a rousing 16.7 percent over November's revised rate of 544,000, according to figures released last week by the Census Bureau. Permits for single-family homes in December were at a rate of 440,000; this is 5.5 percent over the revised November figure of 417,000. December's overall figure for housing permits was still 6.8 percent below the December 2009 estimate of 681,000.
Starts on construction of privately owned housing in December were at a seasonally adjusted annual rate of 529,000. This was 4.3 percent below November's revised estimate of 553,000 and 8.2 percent below December 2009's rate of 576,000. Starts on single-family homes for last month were at a rate of 417,000, which was 9 percent below the revised November figure of 458,000.
Completions on privately owned housing in December were at a seasonally adjusted annual rate of 585,000, which was 4.1 percent over November's revised estimate of 562,000, but is 22.2 percent below December 2009's rate of 752,000. Completions of single-family homes in December were at a rate of 463,000, which was 5.5 percent over November's revised rate of 439,000.
Another encouraging piece of news was the initial jobless claims for the week ending January 15, which rang in well below the previous figure form the Department of Labor's figures for the previous week. In the week ending January 15, the advance figure for seasonally adjusted initial claims was 404,000, a decrease of 37,000 from the previous week's revised figure of 441,000. The four-week moving average was 411,750, a decrease of 4,000 from the previous week's revised average of 415,750.
This week the Conference Board will continue its announcements with consumer confidence figures for January on Tuesday. The Census Bureau will release its new home sales data for December on Wednesday, which is expected to show an increase over November. The Bureau will also release durable goods orders for December on Thursday, which are expected to show an increase after November's drop.
The week will close with the Bureau of Economic Analysis's release of the gross domestic product for Q4 2010 on Friday. Analysts are expecting a 3.8 percent gain over the prior quarter. Also on Friday, the University of Michigan will release its consumer confidence figure for January.
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