Real Estate Market Closes Out 2011 with Home Sales Increase
U.S. home sales took an unexpected turn in December 2011 with a month-to-month increase from November 2011. The 5.7% uptick in residential real estate transactions goes against the seasonal grain of what typically happens in the market at the end of the year. Last month was also the sixth in a row of year-over-year gains for nationwide home sales, according to a National Housing Report released yesterday from RE/MAX based on MLS data compiled from 50+ metro areas throughout the United States.
Home sales were not only up in December from the previous month, but also up from a year ago. It’s just a slight increase, but even the 1.1% improvement is noteworthy in today’s market. Inventory of residential properties for sale has dropped significantly since last year—down 25 percent—marking the 18th consecutive month of diminishing supply. Part of the reason for fewer listings is that the number of foreclosures on the market has decreased.
Chicago was one of 20 metropolitan areas surveyed to have better sales in December 2011 than in December 2010. The number of residential real estate deals rose 16.7% in Chicagoland, according to the report. Areas with median price gains included those hit hardest by the bubble burst, such as cities in Florida and Arizona. Average market time for property listings last December stayed relatively the same as a month earlier and even a year earlier. In November 2011, the average number of days on the market was only one day shorter than in December 2011 and in December 2010 is was only two days shorter than a year later.
A year ago December, there was roughly a 10-month supply of unsold homes on the market across the nation. At the current inventory of active listings and rate of real estate closes, the supply of properties for sale has hovered around 7.8 months for the last couple of months—a notable decline from the same time last year and much closer to the 6-month supply that is the established “norm” for a balanced housing market.
Economists predict the beginning of a gradual turnaround for residential real estate in 2012, citing a pick-up in sales and home construction. A recent forecast from Moody’s Analytics expects existing home sales to go up 12% and single-family home starts to go up 37% in 2012. The jump in buyer activity will not likely bring about an increase in home prices, though, as many of the sales are anticipated to be foreclosures and properties with lower asking prices. Prices however could bottom out part way through the year or next year, say some industry analysts.