Despite the holiday hubbub, homes sales continued their upward trend in December. The National Association of Realtors says existing-home sales, or completed sales on single-family homes, co-ops, condos and townhomes, ticked up 5% to a seasonally adjusted rate of 4.61 million. There were 3.6% more sales completed during the month than during December of 2010 and NAR says that completed sales were 1.7% higher for the entire 2011 year as compared to 2010.
The total housing inventory fell 9.2% to 2.38 million existing homes for sale. At the current sales pace that represents a 6.2-month housing supply — the lowest level of inventory logged in nearly seven years and lower than the seven-to-eight month inventory levels NAR has said indicate steady home prices
“The pattern of home sales in recent months demonstrates a market in recovery,” asserted Lawrence Yun, chief economist for NAR, in a statement. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”
Is Yun right? Could these numbers reflect the hopeful signs of a housing market recovery this year? That depends on who you ask.
Wall Street has grown increasingly bullish in recent weeks about housing. No, firms don’t necessarily think home prices will rebound anytime soon, but many believe that 2012 is the year of the bottom. Goldman Sachs Group released a December report indicating that the home price bottom is in sight. Earlier this week JP Morgan chief executive Jamie Dimon told Maria Bartiromo that, “We have seen the worst. We are at the bottom. We may hug along the bottom for a while, but we are at the bottom.” And Liz Ann Sonders, chief investment strategist at Charles Schwab, told The Street that she also believes housing is nearing its bottom, though a rebound will take years to develop and will occur on a more regional basis. The list goes on.
But market bottom and market rebound remain two different things. Even if the bottom is nigh for housing, price appreciation will take time to settle in. The number of completed sales may have finished the fourth quarter of 2011 in an upward trend, but homeowners need to remember that increased sales don’t automatically mean increased prices. In fact it can mean the opposite.