US Dec home sales fall more than expected after 3-month surge

Source : Business Times – 26 Jan 2010

Sales of existing homes in the United States fell more than expected last December, by nearly 17 per cent, following a three-month surge driven by a government tax credit, an industry organisation said yesterday.

The National Association of Realtors (NAR) said sales fell 16.7 per cent to a seasonally adjusted annual rate of 5.45 million units, from 6.54 million in November.

The sharp decline was worse than an average analyst forecast of 5.9 million units and was the steepest monthly drop since NAR began tracking the data series in 1999.

The industry group said the decline was expected after sales surged from September through November as first-time buyers rushed to take advantage of federal tax credits originally due to expire on Nov 30.

Congress passed and President Barack Obama signed an extension of the first-time tax credit that expands it to include other home purchases made prior to April 30.

The December number was 15 per cent above the year-ago level of 4.74 million units.

‘It’s significant that home sales remain above year-ago levels, but the market is going through a period of swings driven by the tax credit,’ said Lawrence Yun, NAR’s chief economist.

‘We’ll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer, the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010.’

First-time home buyers represented 43 per cent of the market in December, compared with 51 per cent the prior month.

The industry group noted that sales had risen every month since April, apart from a slight dip in August, and had often topped expectations.

For all of 2009, sales of existing homes totalled 5.156 million, a gain of 4.9 per cent from 2008.

‘It was the first annual sales gain since 2005,’ NAR said.