National existing-home sales set annual record

The National Association of Realtors reported Jan. 25 that total existing-home sales - including single-family, townhomes, condominiums and co-ops - were down 5.7 percent from November to December. Despite the off month, sales for the year hit 7.07 million, up 4.2 percent from the previous record of 6.6 million set in 2004.

The soft month should not be cause for concern, according to NAR Chief Economist David Lereah.

“This is part of the market adjustment we've been discussing, with a soft landing in sight for the housing sector,” Lereah said in a news release. “The level of home sales activity is now at a sustainable level, and is likely to pick up a bit in the months ahead. Overall fundamentals remain solid, driven by population and employment growth as well as favorable affordability conditions in most of the country, so we expect the housing market to remain historically high but lower than last year's record.”

Freddie Mac reported that the national average rate for a 30-year, conventional, fixed-rate mortgage was 6.27 percent in December, down from 6.33 percent in November.

The national median existing-home price for all housing types hit $211,000 in December, up 10.5 percent from the same month in 2004. The 2005 median was $208,700, up 12.7 percent from the 2004 median of $185,200.

NAR President Thomas M. Stevens from Vienna, Va., said it could take a while for home price growth to cool.

“We're coming off of five years of tight supply, and many sellers are accustomed to expecting very strong price gains and exceptional returns on their investment,” Stevens said in the release. “With the supply of homes improving and buyers having more choices, the rate of price growth should come down to more normal levels this year.”

Existing-home sales in the Midwest dropped 2.6 percent to an annual pace of 1.52 million in December, while the median home price in the Midwest was $173,000, 10.9 percent higher than the December 2004 price.