Home sales up 6.5% as prices continue to fall

Home prices finally dropped enough to show an increase in sales volume. This still isn't a great sign but at least may signal a bottoming in the home price market. The article below is from Investors Business Daily. Enjoy!

BY SCOTT STODDARD

INVESTOR'S BUSINESS DAILY

Posted 1/26/2009

Home resales unexpectedly rose in December, spurred by a record drop in prices as buyers snapped up foreclosed properties at a big discount, an industry group said on Monday.

Stocks fluctuated as the improved housing data and a surprise uptick in the Conference Board's index of leading economic indicators was tempered by renewed job cuts amid the longest recession in decades. The Dow moved up 0.48%, the S&P 500 0.56% and the Nasdaq 0.82%.

Sales of existing homes gained 6.5% to an annual rate of 4.74 million, the National Association of Realtors said. Economists had forecast 4.4 million, down from November's 4.45 million pace. Sales fell 3.5% vs. a year earlier.

The median price fell a record 15.3% from the prior year to $174,700 as buyers took advantage of discounts on foreclosed homes, which made up 45% of total sales.

"It appears some buyers are taking advantage of much lower home prices," Lawrence Yun, NAR's chief economist, said in a written statement. "But the market is still far from normal balanced conditions."

At the end of December the number of previously owned homes on the market represented a 9.3-month supply at the current sales pace. That's down from a record 11.2 months at the end of November. NAR says a five- or six-month supply is consistent with a stable market.

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