Are we seeing a rebound in Americans' demand for home buying? We could be, according to today's existing home sales report from the National Association of Realtors. Sales increased 12.3% to the annualized rate of 5.28 million. That soundly beat expectations of 4.88 million sales. December was the first month to exceed the 5 million annual sales pace since June, when the market was still benefitting from the home buyer credit. Is this an indication that sales are rebounding or is this just a blip?
First, here's the chart, which provides some perspective on just how much better December's sales were:
As you can see, that's quite a surge. It's the most sales since May. In fact, the 12.3% increase in existing home sales was the largest since at least 1999. At 5.28 million, sales still remain far lower than the six to seven million sales that were common during the housing boom. But sales in the range of five million were pretty standard prior to that unusual period.
Since sales increased, it isn't surprising that inventory also declined. It was down 4.2% to 3.56 million:
It's important to note, however, inventory may look artificially low due to banks' foreclosure slow down. As they try to fix their procedures and get their papers in order, less defaulted inventory is hitting the market.