Sales of previously owned homes hit five-year high

Sales of previously occupied homes hit their highest level in five years in 2012, while prices rose the most in seven years as the housing market showed more signs of a long-awaited recovery. 

Existing-home sales hit 4.65 million last year, up 9.2 percent from 2011, which is the most since 2007, and the strongest increase since 2004, the National Association of Realtors (NAR) reported on Tuesday. 

Sales running at a rate of about 5.5 million indicate a healthy market. 

"Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," said Lawrence Yun, NAR chief economist. 

Potential homebuyers are starting to get back into the market and the nation's improving job creation show boost sales. 

"Both sales and prices will again be higher in 2013," Yun said. 

In December, sales eased slightly in December to a pace of 4.94 million, down 1 percent from a downwardly revised 4.99 million in November. 

All told, sales are 12.8 percent above the 4.38 million-unit level in December 2011.

Total housing inventory at the end of December fell 8.5 percent to 1.82 million existing homes available for sale, which represents a 4.4-month supply at the current sales pace, and is the lowest housing supply since May of 2005.

The national median existing-home price for all housing types was $180,800 in December, which is 11.5 percent above December 2011. 

This is the 10th consecutive month of year-over-year price gains, which last occurred from August 2005 to May 2006, and is the strongest increase since November 2005 when it jumped 12.9 percent.

Despite other hurdles, mortgage rates are at historically low levels, providing borrowers with less expensive loans if they can get financing. 

The average rate for a 30-year fixed-rate mortgage was a record low 3.35 percent in December, according to Freddie Mac. 

"Although mortgage interest rates should gradually rise as the year progresses, they're expected to stay below 4 percent during the first half of the year, meaning qualified buyers generally can stay well within their means," said NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif.

For all of 2012, the preliminary median existing-home price was $176,600, up 6.3 percent from $166,100 in 2011, and was the strongest annual gain since 2005.

Distressed homes — foreclosures and short sales — accounted for 24 percent of December sales below the 32 percent share in December 2011. 

Foreclosures sold for an average discount of 17 percent below market value in December, while short sales were discounted 16 percent.

"Although tight inventory is limiting home sales in many areas, overall sales are expected to stay on an upward trend," Thomas said. 

Single-family home sales slipped 1.4 percent to a seasonally adjusted annual rate of 4.35 million in December from 4.41 million in November, but are 11.5 percent above the 3.90 million-unit pace in December 2011. 

Regionally, sales were up in two of four regions. 

Sales in the Northeast rose 3.2 percent and they were up 5.1 percent in the West. 

In the Midwest, sales dropped 5.9 percent while sales in the South were down 3 percent.