The housing market ended 2011 on an upswing. Sales of existing homes rose 5.0 in December from November, and were up 3.6 percent from December 2010, according to the National Association of Realtors (NAR).
It was the third straight monthly increase in sales, giving the beleaguered real estate industry a measure of hope.
"The pattern of home sales in recent months demonstrates a market in recovery,” said Lawrence Yun, NAR's chief economist. “Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market.”
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96 percent in December from 3.99 percent in November; the rate was 4.71 percent in December 2010; recordkeeping began in 1971.
Cautious note
Despite the good news, many close to the housing economy remain cautious. In a speech at the University of Richmond earlier this week, Elizabeth Duke, a member of the Federal Reserve Board of Governors, predicted more pain ahead for the housing market this year.
Duke noted that between four and five million U.S. properties are either in foreclosure, or headed for foreclosure. Duke said distressed properties are a huge drag on prices, and that things won't improve much until the market is able to absorb those foreclosures.
Foreclosure sales
Foreclosures sold for an average discount of 22 percent in December, up from 20 percent a year ago, while short sales closed 13 percent below market value compared with a 16 percent discount in December 2010.
The national median existing-home price4 for all housing types was $164,500 in December, which is 2.5 percent below December 2010. Distressed homes – foreclosures and short sales – accounted for 32 percent of sales in December, up from 29 percent in November; they were 36 percent in December 2010.
With it remaining difficult to qualify for a mortgage, all-cash sales accounted for 31 percent of purchases in December, up from 28 percent in November and 29 percent in December 2010. Investors account for the bulk of cash transactions, NAR said.
