Sales of previously owned homes jumped 12 percent in December from the previous month, but purchases for the year were the lowest since 1997, according to an industry report released Thursday.
Last year’s sales dropped 4.8 percent to an annual pace of 4.9 million homes, the National Association of Realtors said Thursday. That’s only slightly lower than 2008, but still represents the lowest point in 13 years.
In December, however, sales picked up.
Last month, sales rose to an annually adjusted rate of 5.28 million, the highest pace since May and well ahead of the 4.87 million median projected by experts in a Bloomberg survey. Purchase activity remained 2.9 percent below where it was a year ago.
Low interest rates, relatively affordable prices and tentative optimism about the economy helped lure buyers last month, housing experts said. But the biggest drag on the housing market remains the nation’s high unemployment rate and the bloated supply of homes for sale, including aggressively priced foreclosures.
The supply of existing homes available for sale shrank by 4.2 percent in December to 3.56 million homes. It would take 8.1 months to sell these homes at the current pace. While that’s down from November’s 9.5-month supply, the inventory is still well above the five-to-six-month range considered healthy.
The median existing home price was $168,800 in December, down 1 percent from a year ago. Pulling down prices are the large share of foreclosures and other distressed sales, which made up 36 percent of the market last month, up from 33 percent in November.
“Pricing is still a challenge, but frankly that’s what’s bringing out the sales and helping bring down the backlog of homes,” said Michael Larson, an analyst at Weiss Research. “Adding to the sales results is the improved tone in the employment market, and the creeping sense that the worst may be over or close to it.”
Mark Vitner, a senior economist at Wells Fargo Securities, said he expects prices to keep dropping through the first half of the year. “The story revolves around foreclosures,” Vitner said. “Until the inventory clears, builders are remaining on the sidelines” and prices will remain sluggish.
This week, the federal government reported that builders broke ground on fewer houses in December, when housing starts fell 4.3 percent to the lowest level since October 2009.
Existing home sales were up in every region of the country, led by a 16.7 percent surge in the West. Sales were up 13 percent in the Northeast, 11 percent in the Midwest and 10 percent in the South.
Sales were down 4.5 percent in the Washington region in December from a year ago, but the median price rose to $329,500 from $310,200.