Sales of existing US homes dropped one percent last month. For the first time in more than a decade, the US has the lowest amount of properties available, said the National Association of Realtor.
A 5.1 million-unit rate was predicted but fell short of that with only a 4.94 million rate last month. This is the the second-highest rate of sales since November of 2009. Even with the drop in sales in December, 4.65 million houses were purchased in 2012 making it the most since 2007.
According to Bloomberg, this is a sign the housing market is beginning to recover from the 2007 to 2009 recession when the housing market tanked. An improving job market, low mortgage rates, and an increase in the number of households will most likely increase the demand for housing this year.
Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate, told Bloomberg:
“This isn’t worrisome at all. For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.
According to Reuters, many people are refraining from putting their homes on the market because they owe more on their mortgages than what their home is worth. Home inventories were down 21.6 percent from December 2011.
At a news conference Tuesday, NAR economist Lawrence Yar said that low inventories are encouraging multiple bids on homes and helping to boost prices. The median home resale price was $180,800 in December. Last December, the median resale price was $162,200 which calculates to a 11.5 percent increase.
At the current sales rate, it will take 4.4 months to sell the current number of houses available, which is the lowest since May 2005. Bloomberg reports Yun said, “The only concern going into 2013 is the inventory situation. Price increases are almost guaranteed going into 2013.”
According to Bloomberg, Stuart Miller, chief executive officer of Lennar Corp., the largest US homebuilder by market value, said during a January 15 earnings call:
“After seven years of navigating an unprecedented market downturn, we finally saw stabilization and recovery in 2012. While there have been and still are economic and political uncertainties ahead, we feel that this housing recovery is fundamentally based and driven by a long-term demographic need for housing. 2012, therefore, we believe is just the beginning of the recovery.”