Tough weather conditions in December saw existing home sales remain essentially flat (down 0.6 percent on a preliminary basis) when compared to December 2012, as reported by the National Association of Realtors® (NAR). The median home price was $198,000 for December 2013, a gain of 9.9 percent from 12-months earlier.
For the entire year, NAR reported an increase of 9.1 percent at 5.09 million home sales, the best since 2006. Median price for 2013 gained 11.5 percent, rising to $197,100.
Using a 12-month moving average, (which in my opinion removes the noise from monthly preliminary data and better illustrates the trends), indicated a December 2012 to December 2013 momentum gain in sales of 8.85 percent, while median price escalated 9.9 percent.
The following chart shows both the raw (non-averaged data) and smoothed (12-month moving average).
Both series might indicate a declining trajectory in housing sales. I say might based on the weather in November and December. Both months were riddled with bad weather and storms, which I believe delayed both home shoppers and closings. January is no different. I still anticipate a recovery in the spring as weather warms.
The following graph shows both the 12-month moving averages of sales and median prices. I still stick with a forecast of 5 to 7 percent price increase in 2014 with sales rising 4 to 6 percent by year end.
Somewhat limiting sales is a very light inventory of homes on the market today. Six months inventory is considered normal. Inventory was just 5.1 months in December, supporting rising prices in the near term.
Other details in the release included:
- All cash sales totaled 32 percent of the transactions, up from 29 percent a year ago
- Foreclosures made up just 10 percent of all transaction, while short sales represented 4 percent. The distressed real estate inventory continues to shrink
- Foreclosures sold for an average 18 percent less than non-distressed real estate while short sales sold for 13 percent less
- Foreclosures were on the market an average 67 days, short sales 122 days and non-distressed real estate 70 days.
- The overall average days on the market in December was 72 days compared to 56 days in November. Much of the increase can be attributed to the several waves of severe winter storms in both November and December.
- Investors bought one out of each five home sales (21 percent)
To read the entire NAR news release on December housing sales click http://www.realtor.org/news-releases/2014/01/december-existing-home-sales-rise-2013-strongest-in-seven-years