Existing home sales continued to grow on a month-to-month basis in December, rising for a third consecutive month. The National Association of Realtors (NAR) reported sales of existing homes comprised of completed transactions of single-family, townhouses, condominiums and coops rose 5.0 percent in December to a seasonally adjusted annual rate of 4.61 million. This is an increase from the downwardly revised level of 4.39 million in November. December home sales were 3.6 percent above the December level of 4.45 million a year ago. Only the West reported a slight decrease of 0.9 percent.
In 2011, existing home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010. Single-family home sales increased 4.6 percent in December to a seasonally adjusted annual rate of 4.1 million units and were 4.3 percent above the 3.9 million in December 2010. Condominium and co-op sales increased 8.7 percent in December to an annual rate of 500,000 units, but are down 2.0 percent from the 510,000 pace of a year ago. December condominium and co-op gains were 11.1 percent in the Northeast and 40.0 percent in the West. The South fell 4.8 percent and the Midwest experienced no change from November, but was up 20.0 percent from a year ago.
The housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes for sale. At the current sales level, this represents a 6.2 month supply, down from a 7.2 month supply in November. Investors acquired 21 percent of homes in December, compared to 19 percent in November and 20 percent a year ago. The share of first-time buyers decreased to 31 percent in December from 35 percent in November. That share is down from 33 percent a year ago.
Contract failures, which have been elevated in recent months, remained unchanged in December with 33 percent of NAR members reporting cancellations caused by declined mortgage applications and failures in loan underwriting from the appraised value coming in below the negotiated price. The cancellation rate is much higher than the 9 percent rate reported a year ago.