Existing-Home Sales Fall About 5% in 2010

According to a report released by the National Association of Realtors (NAR), existing home sales fell about 5 percent to 4.9 million in 2010. This included single-family homes, condos and co-ops. In 2009, the number was 5.6 million. The NAR report states that sales rate for previously owned homes rose 12.3 percent in December 2010 as compared to November. But compared to December 2009, the sales slid about 2.9 percent. The number of people who bought previously owned homes in 2010 fell to the lowest level in 13 years. The estimated median price was flat in 2010 at $172,500, compared to 2009.

NAR reported that the seasonally adjusted annual rate of existing single-family home sales rose 11.8 percent from November to December but dropped 2.5 percent compared to December 2009, while the rate of condo and co-op sales rose 16.4 percent in December and fell 5.2 percent compared to December 2009. The median price was $168,000 in December, which is a 1 percent decline from the same month in 2009.

But according to CoreLogic, a provider of housing market data and statistics, home sales totaled 3.6 million, down 12 percent from 4.1 million in 2009. As per CoreLogic’s report, NAR’s existing home sales data are overstated by about 15 – 20 percent. NAR is in the process of evaluating its benchmarking methodology to determine the reality behind this discrepancy.

It’s not just the lower sales numbers that concern economists, but also the falling prices.  Home prices fell 5.1 percent for four straight months ending November 2010. The downturn in home prices is driven by weak sales, an excess supply of unsold homes and larger impact from distressed sales.

The number of homes sold in 2010 was at its lowest point since the housing market collapsed. Sales were more than 50% below the level seen before the crisis in 2005 and 33% below the level measured in 2000.

The trend for 2011 doesn’t show any positive changes. As of the end of November 2010, there was a 16-month supply of homes on the market, which is the highest level since February 2009 when prices were falling about 20% on a year-over-year basis. Typically, the housing market has a six or seven month supply.

Since loans are becoming more expensive, the ability for borrowers to obtain home loans will become more difficult. So what does all this mean for home sales figures for 2011? Only time will tell.